Why Haven’t States That Recently Launched Online Sports Betting Followed Michigan’s Example?

One of the most mature online gambling markets, Michigan, simultaneously launched online sports betting and online casinos in January 2021. Since then, it has become one of the leading US online casino states in terms of revenue generated, with 15 Michigan online casinos available.

Online sports betting has recently been launched in several states, but there has been little talk about online casino regulation. So why was it so difficult to bundle online sports betting and online casinos?

PlayUSA talked to Brandt Iden, the lawmaker who helped legalize iGaming in Michigan, who gave his insight.

Ohio, Maryland and North Carolina went without online casinos

States that have recently launched online sports betting – like Ohio, Maryland and North Carolina – did so without online casinos:

• After Gov. Larry Hogan signed HB 940 into law, Maryland retail sports betting went live in December 2021, while online sports betting got delayed and launched in November 2022. Maryland voters could have gotten the opportunity to approve online casinos this November, but online casino revenue was left out of budget negotiations in April. The bill won’t be introduced until 2026.
• With plenty of sportsbook options, Ohio legalized online sports betting in January 2023. The state’s legislative session runs through the end of the year, and an outgoing senator has filed the first online casino bill, SB312. Although the bill is not likely to advance, Ohio is studying how online casinos would impact the state.
• North Carolina launched online sports betting in March. The state is currently trying to approve more retail casinos before lawmakers could discuss online casinos.

Michigan is one of the states that took a different approach. The Michigan Gaming Control Board authorized nine operators to begin online sports betting and/or online gaming on Jan. 22, 2021. As the lawmaker who, at the time, helped Michigan launch and establish a framework for online casinos, Iden told PlayUSA:

“I think one of the key factors to the success of passing iGaming legislation in Michigan was that the legislature addressed the issue at the same time it was debating sports betting. In fact, the legislation was remarkable in many ways, as it was the first time the state gaming control act had been updated in 20+ years and in doing so established a framework for the future of gaming throughout the country.”

The comprehensive gambling legislation in Michigan addressed the following issues:

•   Daily fantasy games
•   Advance deposit wagering
•   iGaming
•   Sports betting

It was all done “at the same time,” providing for a foundation where “both commercial and tribal gaming could coexist,” Iden said.

States are missing out by not regulating online casinos

Currently, 38 states allow sports betting. Meanwhile, just seven allow regulated online casino play.

Iden said states that haven’t regulated iGaming are missing out. He explained:

“As we look at other states that have recently addressed gaming expansion, they only dealt with the issue of sports wagering. While regulating sports wagering in these states has undoubtedly brought in new tax revenue and helped protect consumers from the unscrupulous actors of the illicit market, these states and their citizens are still missing out by not regulating iGaming.

As a former lawmaker, I understand the political challenges of having to come back in a subsequent legislative cycle and revisit gaming legislation.

However, I can also assure you that state citizens will thank you for the consumer protections of a regulated marketplace and state tax coffers will enjoy the boost of new tax dollars.”

In July, the US online casino industry posted its fastest annual growth rate in gross gaming revenue since 2022. Combined revenue across all legal online casino states totaled nearly $672 million for the month. Last year, online casino revenue hit $6.5 billion and is estimated to reach $7.8 billion in 2024.

Besides Michigan, online casinos are legal in New Jersey, Pennsylvania, West Virginia, Connecticut, and Delaware. Launching online casinos on March 5, Rhode Island was the only US state to legalize online sports betting and then regulate online casino play this year. This was because of Bally’s initiative, as it wanted to protect its sole operator status in the state.

Unregulated online casino states are not only missing out on revenue

To find out more about online casino regulation in North Carolina, which was the latest state to launch, PlayUSA reached out to Michelle L. Malkin, JD, PhD, Assistant Professor – Department of Criminal Justice and Criminology and Director – Gambling Research & Policy Initiative (GRPI). Malkin said:

“North Carolina was looking to potentially legalize video gaming terminals and additional casinos in the state when they settled on just sports wagering at this time. It is likely that the legislature will continue to look at legalizing the additional forms over the next several legislative sessions.”

When asked if she sees online casinos as an option in North Carolina any time soon, Malkin said:

“At this time, I have not heard that NC is looking at legalizing iGaming. That said, due to the internet, individuals in NC have access to a number of illegal/unregulated online casinos.”

Malkin addressed her concern about players accessing offshore illegal operators without knowing they are unregulated in the US. She emphasized:

“Research shows that individuals do not necessarily know whether igaming is legal or not, and whether the sites they use to wager are legal or not. There is little on the sites that distinguish a legitimate legalized site for gambling and those that are not.”

Legal online casino states, like Michigan, remain willing to help the US Department of Justice pursue enforcement of US laws against illegal gaming companies targeting US citizens.

In addition to job creation and tax revenue, states legalizing online casinos would help address the issues of the black market and support responsible gaming.