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State of Play’s TL;DR
- The online casino industry is growing faster than traditional casino gaming in the US, but a new industry analysis argues retail casinos still have one key advantage the internet cannot fully copy: in-person interaction.
- The real opportunity may be blending the two, not forcing one to become the other.
Waterhouse VG argues that land-based casinos still own three durable strengths over online casinos: “permission, place and people.”
In other words, governments still treat physical casino licenses as scarce assets, casinos remain destination venues, and the social side of gambling still matters because, as the piece puts it, “nothing beats interaction.”
The online casino industry, however, is not standing still. Digital products can be built, personalized, and scaled faster than land-based products. In the US, that speed is showing up in the numbers: Online casino revenue grew 27.6% in 2025 to $10.74 billion, while traditional casino gaming grew 2.3%.
Only eight states have legalized online casinos, with seven currently live, yet those seven states generated more than $10 billion in 2025.
According to Waterhouse, the answer is not to turn casino floors into websites. It is to add digital features around physical play.
“The machine stays physical. The layer around it becomes digital.”
Illegal gambling sites impact both retail and online casinos
This is a reminder that the online-versus-retail debate is not just about convenience. It is also about what each format does best. Online casinos can move faster, tailor offers, and scale across a state more easily. Retail casinos still offer the live atmosphere, social energy, and destination appeal that digital products struggle to recreate.
For operators, the numbers raise the stakes. Waterhouse notes that online casino revenue in Pennsylvania and New Jersey overtook commercial land-based revenue for the first time in 2025. That is a major signal for companies with both retail and digital exposure, including MGM Resorts, Caesars Entertainment, PENN, and Boyd.
There is also a policy angle. The American Gaming Association estimates illegal and unregulated US gambling generates $53.9 billion annually and costs states $15.3 billion in taxes. In that context, regulated operators have room to compete more effectively if they connect retail and digital experiences better, Waterhouse argues.
Waterhouse VC also said it has taken an option in Slot Check, a business building tool for near real-time machine performance information, plus challenges, tournaments and social play features.
Based on reporting by Tom Waterhouse of Waterhouse VC for iGB.
