Online Casinos Offer Big Business Opportunity with a Whopping $402 Million in Revenue Gains

By Adriaan Brits Thursday, September 3, 2020

The internet is changing the face of gaming as we know it. When you think of “online gaming,” the first thing that pops into your mind may be a video game. However, it’s expanded so far from where it was only ten years ago. Online casinos are starting to become the norm.

How, exactly, did this business rapidly gain popularity?

A huge catalyst has been the pandemic. While brick-and-mortar casinos were unable to provide for gamblers and risk-takers, online casinos have swiftly stepped in and whisked customers away. Popularity particularly rose during the lockdown, as consumers simply had no other alternative.

In the second quarter of this year, during the pandemic’s peak, revenue from online gambling games such as blackjack, poker, and slots totaled almost a whopping $402 million — almost the whole of last year’s profit, in just one-quarter of the time duration.

An Ever-Growing Industry

In recent years, sports wagering companies that work online have also found it to be a booming industry online. They, too, had outperformed their benchmark indexes over this past year, with DraftKings’ — an online sports wagering company — capitalization reaching over $12 billion, which is higher than well known, real-life casinos such as Caesars.

But even the best sports wagering companies — like DraftKings and FanDuel have started to struggle in the pandemic too. As sporting events, like from the Tokyo 2020 Olympics, had to be delayed inevitably, revenues for these companies have gone down. After all, if there aren’t any sports events going on, there was no need for wagering. However, as the pandemic eases and leagues start to resume, revenue is beginning to bounce back.

In the meantime, unsurprisingly, online wagerers found somewhere else to wage their money — and that would be straight into the online gambling business, which has been poised and ready to grab customers from anywhere.

The companies participating in online gaming are a mix. Some traditional casino companies, like Caesars, and The Golden Nugget, have decided to expand their operations online. These companies are hoping to get some revenue from online, although it isn’t big enough to make up for what they would make, had their casinos been open.

Others, like DraftKings, are choosing to expand their online business, going beyond online sports wagering into casino games.

The huge rise is even more of a big deal because online casino games are only operational in five states due to legal restrictions from the Federal Wire Act. This act prohibits the operation of certain types of betting businesses in the US that use wire communication. Online sports wagering, however, is permitted in 22 states.

Setbacks and Concerns

While online gaming businesses are expected to grow, they are still heavily outweighed by physical institutions. In the second quarter of 2020, when online gaming made the most they’ve ever made ($402 million), physical casinos made more than five times that amount, at $2.3 billion — and that’s with only four out of five of them open.

More and more states are starting to legalize online gambling platforms as they recognize the practice as a new source of revenue. Gaming experts are starting to see a lot of potential for online wagering games. This new industry, producing a lot of revenue, could mean more funding for things like mental health services and funding to benefit the unemployed and some infrastructure programs.

It’s expected that this business will keep growing. Customers like convenience, and what easier way to gamble than in the comfort of your home and smartphone? However, there are questions over whether online gambling can be causing more harm than good. If states do start pouring some of this revenue into services for people’s mental and physical health, they may well be fixing other people’s wellbeing at the cost of others.

There are ethical problems to be discussed, and gambling addiction is no small feat. It can be a very big problem, and having a casino right at your fingertips could be worse than having physical casinos. Before going to a casino, a person would have to decide whether they have enough cash or whether it’s worth traveling for.

With online gambling, the money is right there; gamblers will find they can pay online with just the press of a button, and addiction is so much closer. Once you leave a casino, the gambling part is over — but with online gambling, it is accessible wherever you are, following you wherever you go.

About the Author

Headshot of author Adriaan Brits

As an analyst of global affairs, Adriaan has an MSC from Oxford, with diverse interests in the digital economy, entertainment, and business. He is a specialist trainer in Advanced Analytics & Media.

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