Online Sports Betting vs Casino: Which is the Bigger Concern?
Author:
Zach Lutz
Reviewed by:
Published:
Oct 29, 2024
,
03:42 p.m.
ET
The expansion of online gambling has generated strong debate about its impact on bettors and society at large. With both sports betting and online casino (iGaming) flourishing, nowadays many regulators, researchers and the public alike have been asking: which one poses a bigger threat?
To answer this, we need to examine profit margins, popularity, addictiveness and the legal landscape of both options. Let's explore the key differences between them to understand their implications on gambling habits, profitability and addiction concerns.
Is online sports betting or iGaming and iCasino more profitable for gambling companies?
When it comes to profit margins, iGaming holds a significant edge over sports betting. Online casino offerings like slots and table games have a built-in house advantage, which means that over time, consistent returns for operators are almost guaranteed. For instance, in Ontario’s first year of iGaming in 2023, online casinos generated $1.4 billion in revenue, with only 20% allocated to player winnings. Sports betting, by contrast, operates on much slimmer margins, as bettors occasionally "beat the book," and operators rely on high volumes to maintain profitability.
The numbers show iGaming’s remarkable growth potential: in 2024, Michigan alone saw $200 million in monthly losses from online casinos, compared to $29 million in sports betting losses. With such returns and margins, industry experts anticipate that as more states potentially adopt iGaming, operators will see even greater profitability than with sports betting.
Which is more popular: Online sports betting or casino?
Both online casinos and sports betting have seen increased popularity in recent years, but their availability and legal status differ significantly across the United States. Sports betting, boosted by the 2018 repeal of PASPA (Professional and Amateur Sports Protection Act), is now legal in 38 states, plus Washington, D.C. This rapid expansion has led to partnerships between sportsbooks and major sports leagues, helping normalize sports betting in U.S. culture. However, only seven states permit online casino gaming, largely due to the potential societal impacts and regulatory complexities associated with it.
For states weighing legalization, sports betting has been the more accessible entry point, often viewed as a socially acceptable activity tied to sports fandom. The likelihood of increased state tax revenue has further incentivized states to embrace sports betting, leading many to consider extending legalization to iGaming. Industry projections estimate that the U.S. online gambling market could nearly double by 2029, particularly if additional states open to iGaming.
Which is more addictive: Online sports betting or iCasino?
From an addiction perspective, iGaming has unique dangers. Casino games, especially slots, are designed for rapid engagement and quick outcomes, encouraging continual play and making it easier for players to chase losses. Sports betting, on the other hand, traditionally involves waiting for game outcomes, which slows the gambling cycle and reduces some potentially impulsive behaviors.
That said, sports betting presents unique addictive qualities. Many gamblers perceive sports betting as a skill-based endeavor, convincing themselves that "smart bets" can yield consistent wins. This perception, coupled with the rise of longshot parlays, can lead sports bettors to adopt high-risk strategies under the guise of skill, driving potentially harmful betting patterns. Further complicating matters, sports betting often comes with social pressures or rituals, making it harder for gamblers to recognize when their behavior has crossed into unhealthy territory.
Where are online casino and iGaming legal?
Understanding the regulatory differences between sports betting and online casinos can further illuminate why one might be a greater concern. Online sports betting is legal in 38 states, while only seven states allow legal iGaming:
New Jersey
Pennsylvania
Michigan
Connecticut
West Virginia
Delaware
Rhode Island
Many states have taken a more cautious approach to online casinos due to the higher risk of addiction and potential for financial harm among vulnerable populations.
Some states, including New York, Iowa, Maryland, Illinois, Georgia, Minnesota, Missouri and Oklahoma are now considering expanding into iGaming to keep up with market demand and increase tax revenue. Several states that initially legalized only sports betting are reevaluating whether to permit online casinos, given the significant tax benefits.
What are the arguments for and against iGaming legalization?
Different forms of gambling can attract different demographics. Lottery players tend to be among the lowest earners, spending a disproportionate amount of their income. By contrast, sports betting is popular among higher earners, notably young men with incomes over $100,000 annually. This contrast suggests that sports betting may be less regressive, although the accessibility and high engagement among affluent demographics could contribute to significant losses in this group.
Skill vs Passive Engagement
One key difference between iGaming and sports betting is the potential for skill development. Like poker or trading, sports betting involves some degree of skill, allowing gamblers the option to engage in strategy and develop insights into probability and risk. Sports betting is also more social, often fostering fan engagement and camaraderie. By contrast, iGaming requires no skill, is available 24/7 and often becomes a solitary activity with high potential for financial losses.
Risk of Cultural Normalization
The main concern with iGaming is the potential for addiction and financial harm as it becomes more accessible and culturally normalized. With constant availability, games designed to encourage fast and repetitive betting, and an absence of skill requirements, iGaming could increase financial instability across a broader demographic than sports betting alone. Many argue that prioritizing restrictions on iGaming, rather than re-regulating sports betting, may better protect vulnerable consumers.
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