In 2013, Nevada became the first state to legalize and launch online poker. Other states have followed suit by creating full-fledged online gambling markets, with casino games like blackjack, baccarat, and roulette.
The Silver State, however, has chosen to limit its online betting industry exclusively to online poker and sports betting, with no casino games available. That philosophy appears to be changing, however, as the state’s top gaming regulators began exploratory talks on the issue in May 2021.
On that note, let’s take a look at three reasons Nevada blocked online casinos for almost a decade, as well as three reasons for the recent change of mind.
3 reasons Nevada historically opposed online casinos
1 – The owners of corporate casinos have embraced the myth of “cannibalization”
A lot of people just assume that Nevada’s lack of online casino games is based on some strictly written law.
In fact, when local lawmakers approved Assembly Bill 114 eight years ago, the law simply allowed âonline gamblingâ in its entirety. The Nevada Gaming Control Board (NGCB) then obtained regulatory powers over the state’s online gaming industry. But he chose to license poker and sports betting operators only.
One of the main reasons the NGCB has yet to license online casino games is a concept known as “cannibalization” of the market. Essentially, the big bosses who run big casino companies like MGM and Caesars believed that every dollar played online was a dollar less wagered at their various properties in person.
If you prefer a more academic explanation, here’s how researchers Verve Marianneau and Janne Nikkinen summarizes the concept in a 2018 study titled Market Cannibization Within and Across Gaming Industries: A Systematic Review:
âIn economics, cannibalization refers to a process in which a new product or service partially or totally replaces those in existing markets. “
In the run-up to the legalization of online betting in Nevada and New Jersey, industry stakeholders widely believed that their existing business interests would be directly threatened by the new competition.
After all, if players can play at a blackjack table from the comfort of their couch, why would they need to visit a casino in person?
Considering the seriousness of this issue at the time, it’s easy to see why the top Las Vegas gambling operators ruled out competition from online casinos. The city recently lost its monopoly on the US sports betting market. So, adding unaffiliated online rivals like DraftKings and FanDuel to the mix was widely viewed as a non-starter.
As you’ll learn more below, the cannibalization argument was quickly refuted when New Jersey’s thriving online betting market was revealed. to reinforce revenues for Atlantic City ground operators.
2 – Las Vegas economy relies on land gamers spending extra money
Leaving aside the fallacy of cannibalizing gambling revenues, Las Vegas casinos are practically printing money through a plethora of non-gambling attractions and amenities.
Restaurants, sports bars, spas, gift shops and even roller coasters combine to make the Strip an entertainment destination in its own right. Indeed, millions of visitors flock to Las Vegas every year without ever betting.
While the casino provides a unique backdrop, these guests arrive with the intention of being pampered. They provide their family with a fun vacation, seeing the sights and sounds that only Sin City can offer visitors.
And people who love to gamble aren’t immune to the city’s charms, either. Between sessions at the blackjack table, they can go to the buffet or watch a show.
When they’re done spinning the slots, it’s time to take a look at the hot new nightclub upstairs. And after you’ve cashed in a few sportsbook winners, there’s no better place to celebrate than a glitzy steakhouse.
When you add it all up, land-based casinos depend on all that non-gambling money that comes in daily.
From a bottom line standpoint, every time a guest decides to stay home and play online, the casino loses any additional expenses they might have made at the resort.
3 – Sheldon Adelson waged war on the entire online gaming industry
It is never pleasant to speak ill of the dead. But during his life at the helm of Las Vegas Sands Corp., the late Sheldon Adelson has drawn the wrath of the online gambling community.
Several times a billionaire thanks to the success of his Venetian and Palazzo casinos, Adelson was infamous for his hatred of any online alternative. In the aforementioned cannibalization study, the authors directly mention Adelson’s vehement opposition to iGaming in America:
“Some land-based gambling providers, such as the Las Vegas Sands Corporation and its founder and president, have opposed all online gambling and feared that it will compete directly with established offline sites.”
When the US Department of Justice (DOJ) ruled in 2011 that the federal Wire Act only banned online sports betting, with poker and casino games exempt, Adelson spared no expense to change his mind. Spending millions of dollars, Adelson created a lobby group called the Coalition to Stop Internet Gambling (CSIG) to hunt down lawmakers in Washington.
His efforts even led to the passage by Congress of a bill known as the Restoration of America’s Wire Act (RAWA).
Given his political influence and local influence – Adelson bought the Las Vegas Review-Journal in 2015 – the current blocking of online gambling in Nevada was part of the land-based casino mogul’s plan.
3 reasons why this resistance could end
1 – cannibalization has been debunked in states like NJ and PA
One of the main reasons the NGCB is discussing the expansion of online betting happened in New Jersey seven years ago.
Around this time, as the Garden State online casino bet was starting to pay off, Borgata Casino was showing an increase in revenue. As the state’s market leader, parent company Boyd Gaming and CEO Keith Smith have made it clear that online integration is driving this growth:
âOur performance as a market leader is a testament to the quality of our in-line product and the strength of the Borgata brand.
These results also demonstrate once again the potential of online gambling to grow our business. About 85% of our online players have not played Borgata for at least two years, showing that there is little overlap with our land-based activities.
Online games are expanding our database, creating a long-term opportunity to market Borgata to a whole new group of customers.
As Smith explained, the Borgata Hotel Casino & Spa maintained its existing land-based clientele while adding a lucrative source of new revenue. People who like to come to the casino still do, but those who haven’t now had an alternative to play.
This experience also ties in with the conclusions of Marianneau and Nikkinen. In their study, they observed that iGaming was “complementary” rather than cannibalistic, bringing on board a new demographic that would otherwise have refused to gamble entirely.
2 – People will always visit the Strip and spend the best price for the experience
Despite the disruption caused by the 2020 pandemic, the Las Vegas casino industry has rebounded rather admirably.
That’s because the allure of visiting the Strip for rest, relaxation and entertainment will last forever. You really can’t find anywhere else like this weird city of ours, so demand remains high even during an economic downturn.
In fact, the city’s tourism rates aren’t just holding up, they’re increasing every year. Leaving 2020 aside for obvious reasons, find out how Las Vegas continues to grow its tourism base year on year over the past decade:
|YEAR||Annual Visitors to Las Vegas|
|2009||36 351 469|
|2010||37 335 436|
|2011||38 928 708|
|2012||39 727 022|
|2013||39 668 221|
|2015||42 312 216|
|2016||42 936 100|
|2017||42 214 200|
|2018||42 116 800|
|2019||42 523 700|
As you can see, these 40 million visitors showed up on a regular basis. Knowing this, why would anyone believe that live dealer online baccarat is suddenly going to hurt one of the most stable visit rates on the planet?
3 – Adelson’s death and Sands’ departure cleared the last logistical hurdle
Once again, the deceased deserve their respect, so we’ll leave this last reason short and sweet.
Just like that, the last chess piece on the chessboard that stood in the way of online play was taken out of the equation.
And as a result, agencies like the NGCB are now free to pursue online casino games without Adelson getting involved in their work.
Keep an eye out for upcoming changes
Whether online casino games will eventually make it to Nevada remains an open question, but the NGCB’s public hearings in May were an important first step. With online poker and sports betting already here, it’s safe to say that old fears about cannibalization can be allayed.
These markets continue to thrive in Las Vegas land-based casinos, so simply adding a third vertical market to the Nevada online betting market will not be disruptive. Indeed, as Smith saw with his Borgata experience, local casinos are likely to learn to like the possibility of attracting new players to virtual tables.