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John Connelly, CEO of Interblock, a manufacturer of electronic table games (ETGs) for land-based casinos, pondered whether the rise of online casinos is similar to Netflix. If so, does that make land-based casinos similar to Blockbuster video?
Connelly’s presentation this week at the Global Gaming Expo (G2E), “Evolution of Casinos: Merging Digital and Physical Gaming for Enhanced Engagement,” was geared toward the land-based casino industry. The rhetorical question certainly got the attention of everyone in the room.
Netflix is the top streaming service today, but it didn’t start that way. The company used to mail members DVDs before switching to an all-digital service in 2011.
When Netflix went digital, the company was worth about $3.2 billion. In 2022, the company was worth $31.6 billion and stopped its DVD service.
Meanwhile, revenue for Blockbuster Video peaked in 2004. Six years later the company filed for bankruptcy.
The point of the comparison was to question whether land-based casinos were slow to react to the digital revolution similar to video outlets. During the discussion, he shared information about how his company, Interblock, is helping land-based casinos evolve.
The room full of land-based casino executives understood his position that online casinos and land-based could be headed for a similar situation.
Key takeaways
- Online casino revenue doubled in two years.
- US online casinos‘ revenue is $6.5 billion.
- Online casino revenue is growing 5% annually.
- If land-based casinos don’t evolve, online could become the dominant form of gaming revenue.
The growth of US online casinos is impressive
Online casinos are only available in six states and revenue is rapidly growing. It took just two years for this segment to double its revenue.
By contrast, it took 18 years for traditional US table game revenue to double.
Connelly pointed out that in January, online casino revenue was more than 70% of table game revenue in North American casinos. In just four years US online casino revenue has reached $6.5 billion.
Online casino revenue is growing 5% every month for states that offer the product. When more states legalize online casinos this growth rate will increase.
Connelly thinks online casino revenue will have a “similar trajectory as online sports betting in the next four to five years” because iGaming is more profitable. He compared the online gaming space to land-based casinos saying the operators will see greater profits from online casino games like online slots and table games and not sportsbooks.
He pointed to the stellar revenue generated by New Jersey and Pennsylvania online casinos as examples of strong iGaming markets. For example, PA land-based casino revenue is steady while online gaming is growing.
Similarly, land-based gaming revenue is flat, while online casinos are growing. NJ’s online gaming revenue has surpassed land-based slot machines for the past eight months. Overall, online casino revenue represents 44% of the total casino win for the state.
Thinking about land-based casinos in an online world
Detailing the strength of the online casino business was a way to alert land-based operators that there could be a threat to their business. Connelly posited three examples of the future of the gaming industry:
- Will online casinos overtake land-based?
- Will land-based casinos dominate online?
- Will the two segments merge?
Connelly believes that the two segments will work together and become stronger together in the future. He posits that if they don’t one could squash the other.
This panel was for land-based casino operators to ponder their future. But it also highlighted the strength of online casinos. He wondered aloud if land-based casinos were doing something to drive players online or if the industry wasn’t changing enough for today’s customers.
There are thousands of land-based gaming facilities in North America but more than $6 billion is now going towards online gaming. In his mind, Connelly thinks all of the money being spent in online casinos should be spent in traditional gambling spaces.
Perhaps the land-based casinos aren’t evolving as fast as they should. Online casinos are strong and growing and the only thing in the way appears to be the lack of expansion into new states.
