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Budget pressures are keeping online casino legalization under consideration in several states, even as concerns about retail casinos and consumer protections complicate the debate.
Those issues surfaced Sept. 18 during a roundtable hosted by the iDevelopment & Economic Association (iDEA), according to Sports Betting Dime. Massachusetts state Rep. David Muradian, Ohio state Rep. Brian Stewart and Virginia state Sen. Jeremy McPike discussed the political and economic factors shaping efforts to legalize online casino gaming, ahead of the 2027 legislative sessions. iDEA State Advocacy Director John Pappas moderated.
A common theme emerged. Lawmakers increasingly see real-money online casinos as a source of tax revenue, but they are wrestling with how to expand gambling without hurting existing casinos or weakening consumer protections.
States see online casinos as revenue opportunity
Muradian, Stewart and McPike each cited the prospect of new tax revenue as a reason online casino proposals remain alive.
Muradian said Massachusetts residents already gamble through offshore websites and other unregulated operators. That leaves the state to choose between letting the activity continue unchecked and regulating it to collect taxes. He said the Massachusetts Gaming Commission has built one of the nation’s best-regulated sports betting markets, making online casinos a logical next step.
Budget concerns have added momentum. In June, the Supreme Judicial Court removed from the November ballot a proposal to cut the state income tax rate from 5% to 4%. Muradian said the cut would have created a roughly $4 billion budget shortfall, and online casinos had been discussed as one way to help offset the lost revenue. Independent analyses have put the potential gap at more than $5 billion.
Ohio lawmakers are weighing similar math. Stewart said many legislators who oppose gambling on moral grounds still see the appeal of the tax revenue. Ohio studies have projected $400 million or more in annual tax revenue once an online casino market matures.
That potential is shifting the debate, Stewart said. Lawmakers are becoming more willing to back a high tax rate if it produces, in his words, “an awful lot of money we can use to eliminate our income tax.”
Protecting retail casinos remains a hurdle
Lawmakers acknowledged that protecting land-based casinos is one of the biggest political obstacles.
Stewart’s House Bill 298 would limit online casino licenses to Ohio’s 11 casinos and racinos. The bill, co-sponsored by Rep. Marilyn John, would impose a 28% tax rate and a $50 million licensing fee. It remains before the House Finance Committee.
Stewart said he also wants to require operators to make promotional credits redeemable at physical casinos and racinos rather than online, a change meant to steer players to retail properties. That provision is not in the bill as introduced.
Virginia faces similar concerns. McPike said the state’s brick-and-mortar casinos worry that online gambling could cannibalize in-person revenue, and he acknowledged the gaming market could reach a saturation point.
Virginia lawmakers failed to reconcile competing online casino bills earlier this year. Both chambers of the General Assembly passed separate legislation in 2026, but negotiations broke down before the session ended in March. The proposals would have allowed each of the state’s five land-based casinos to partner with up to three online operators.
McPike also said iGaming revenue is difficult to forecast and that estimates should stay conservative until the market takes shape in Virginia.
NJ online casinos offer encouragement and caution
Pappas cited New Jersey, one of the first states to legalize online casinos, as the industry’s strongest example that online and retail casinos can grow together.
The state posted record total gaming revenue of $6.98 billion in 2025, according to the New Jersey Division of Gaming Enforcement. Online casino win reached $2.91 billion, surpassing land-based casino win for the first time. Atlantic City casino win rose 2.7%, its best result since 2012.
Pappas said New Jersey’s online casinos are on pace to top those figures in 2026, and newer data partly support that. Through August, total gaming revenue was $4.81 billion, up 5.4% from the same period in 2025, ROI-NJ reported on Sept. 17, citing the division’s figures. Online casino win rose 13.2% to $2.13 billion, while casino win at Atlantic City’s nine casinos rose 1.8% to $2.01 billion.
August was softer. Total gaming revenue fell 4.1% from a year earlier to $615.7 million, and casino win dropped 5.5% to $294.9 million. Online casino win grew 4.4% to $259.3 million, the only revenue category to post a year-over-year gain.
Brian Tyrrell, faculty director of Stockton University’s Lloyd D. Levenson Institute of Gaming, Hospitality and Tourism, said brick-and-mortar casinos outpaced online casinos for the second consecutive month.
Record revenue also has not guaranteed stronger finances for operators. Atlantic City casinos reported a 0.5% decline in net revenue and a 3.9% drop in gross operating profit in 2025, according to state data.
States weigh regulation against offshore gambling
The lawmakers also pitched regulation as a way to bring an existing offshore market under state oversight. Muradian said he wants to give residents a safe, legal alternative to unregulated sites.
Only seven states currently operate regulated online casinos, which shows how difficult legalization remains despite growing interest.
For now, revenue pressures are keeping iGaming on legislative agendas. Pappas said lawmakers are only beginning to set their 2027 priorities, and he expects the issue to be part of the discussion in several states.
