Casino And iGaming Cannibalization: Real? Imagined? Neither? Both?

It is the question that continues to be debated in the gaming industry, with definitive answers still lacking: Does internet casino gaming cannibalize the revenue of its brick-and-mortar counterparts?

Despite the flurry of legislation filed across multiple states to start 2025, the fact remains only seven currently offer iCasino. Rhode Island is the only state to launch in the last four years, doing so last March, but it is essentially a de facto monopoly run by Bally’s. Delaware, meanwhile, became a more productive de facto monopoly at the start of 2024 after Rush Street Interactive took over for 888 Holdings.

The two states offer little fodder in the way of settling the debate because both have small brick-and-mortar casino footprints. Bally’s has two properties in Rhode Island; Delaware has three racinos.

The bigger states that comprise the bulk of the internet casino revenue generated — Michigan, New Jersey, and Pennsylvania — all are grappling with the same question and trying to find specific answers with context while studying the numbers.

In this article, we look at 2023 and 2024 figures for these three states, and without trying to be evasive, the best answer to the question is: It depends.

New Jersey: The rise of the machines

It only happened once in 2024, but it was quite the event. New Jersey’s online casinos generated more revenue than their Atlantic City counterparts in October, setting a short-lived record with $213.6 million compared to $208.7 million reported from Atlantic City venues.

The Boardwalk restored some equilibrium the final two months of the year, but barely. The margins were less than $10 million in November and below $4 million in December as iGaming operators furthered that monthly state record to $228 million to close out 2024.

The overall gap between the two was still a healthy $430.7 million last year, but it failed to hide the elephant in the casino. Year-over-year revenue from Atlantic City declined 1.1% compared to the $2.85 billion reported for 2023, while internet casino operator revenue surged 24.1% to $2.39 billion.

Further, iGaming growth has been sustained by Garden State operators. There have been 20 consecutive months of double-digit, year-over-year growth reported. Also, December’s record revenue haul was a 49.2% increase compared to a then-record $152.9 million reported in January 2023.

Atlantic City casinos, in contrast, have had only one month with double-digit, year-over-year growth the last two years — a 15.3% bump in January 2023. There were also single-digit percentage declines in seven months in 2024.

The New Jersey Department of Gaming Enforcement does not publish monthly drop totals for online casinos, but seven of the nine Atlantic City venues reported year-over-year declines in the amount wagered. The $26.77 billion in total drop was down 1.2% from 2023 and tracked closely with the revenue decline.

Without knowing how much people are wagering on their smartphones and laptops, it is difficult to determine much action is truly leaving Atlantic City, but the answer in 2024 kept appearing to be “more than last year.”

Michigan: Does Motown need mojo?

Because Michigan casino gaming is a mix of commercial in Detroit and tribal everywhere else, Detroit’s three commercial casinos will be used as points of comparison since the state’s Gaming Control Board does not publish monthly brick-and-mortar numbers for tribal-based casinos.

But make no mistake: Those 12 online skins are a formidable presence in the Wolverine State and contributed heavily to a 26.9% increase in year-over-year adjusted gross revenue to nearly $2.2 billion. AGR from tribal iGaming edged over $1 billion in 2024, a 65.4% bounce on par with the 65.3% combined increase from BetMGM, FanDuel, and PENN National originating in Detroit.

Like New Jersey, Michigan’s iGaming operators closed out 2024 in record fashion with a haul of $219.6 million in December and set records each month the final quarter. Michigan’s online operators have posted double-digit, year-over-year percentage gains every month each of the last two years, which comes into sharper focus when recalling the strikes that took place at Detroit casinos in October and November of 2023.

The strikes also skewed year-over-year comparisons. All three Detroit casinos posted year-over-year increases in 2024 and had combined growth of 4.9% to $1.28 billion. But it is worth noting that MotorCity Casino and Hollywood Greektown had year-over-year declines for their December figures. MGM Grand, meanwhile, reported a modest 1.3% increase.

That combined growth also severely lagged behind the 26.7% increase to $1.18 billion the three online skins reported for 2024. There are also parallels to New Jersey — online casino revenue exceeded brick-and-mortar winnings each of the last three months, and the spread increased each month. The 1.9% decline from Detroit’s three in-person casinos coupled with the 36.3% increase from their online counterparts created a gap of nearly $9 million between the two for December.

Pennsylvania: Online slots take center stage

The Pennsylvania Gaming Control Board reported a record $6.14 billion in adjusted gross revenue for gaming in 2024, an increase of 7.7% from the year prior.

That uptick is highlighted by a 25.3% rise in iGaming revenue to $2.18 billion. Pennsylvania also had a fabulous close to 2024 with a record AGR haul of $223.7 million, with $164.3 million of that coming from online slots.

A key reason for iGaming slot revenue growth: A staggering increase in drop. Online bettors had $43.26 billion worth of play on slots, up 26.1% ($8.96 billion) from 2023.

Retail play, in contrast, dipped 1% to $31.62 billion. Thus, it is easy to see how gross slots revenue surpassed the 2023 high-water mark of $156 million in all months but January in 2024.

The table games revenue gap closed notably between the two disciplines, accelerated with full-year availability for both Bally’s and Golden Nugget and the mid-year launch of bet365. The PGCB does not provide drop figures for retail table play, but the online skins reported $31.27 billion in play for 2024 — up 6.7% from the previous year.

One interesting aspect of Pennsylvania online gaming is the appearance of a “proper” blend of retail and online. Among the three top brick-and-mortar revenue generators are Wind Creek, Live!, and Parx. Each has an online presence that serves mostly as an additive feature.

The online leaders are PENN National and Valley Forge, with the former home to multiple leading online skins, and the latter FanDuel’s tether. Rivers looks to have the best of both worlds with retail locations in Philadelphia and Pittsburgh plus an online games suite that contributes to a top-three revenue presence.

FanDuel among the common threads for growth

Most everyone recognizes FanDuel as the No. 1 or No. 2 mobile sportsbook in every state in which it conducts commercial wagering. But in New Jersey, Michigan, and Pennsylvania, 2024 served as a year of explosive iGaming growth.

Last year marked the first time the NJ DGE provided monthly online skin figures as opposed to the combined licensee totals. Year-over-year comparisons are unavailable, but FanDuel’s $506.6 million in winnings put it a close second behind DraftKings ($515 million) and within shouting distance of the $524.8 million from all combined operators under the Golden Nugget umbrella in 2023.

FanDuel more than doubled its AGR in Michigan in 2024 to $552.8 million. That $320 million increase represented 68.7% of the state’s overall iGaming revenue growth. FanDuel solidified itself as BetMGM’s primary competition in the Wolverine State and posted monthly gross revenue wins in March, April, and October.

Serving as the lone skin of Valley Forge Casino, FanDuel posted 46.1% revenue growth from 2023 to $573.5 million last year. Its dominant market share in mobile sports betting likely creates coattails in iGaming: FanDuel appears to be the top individual operator in Pennsylvania as PENN National’s monthly totals are a combination of DraftKings, BetMGM, and Fanatics figures. FanDuel reported $20.55 billion in total drop in 2024, more than 50% of PENN’s $30.8 billion.

Put it all together, and FanDuel served as the primary engine of iGaming growth in 2024. Only time will tell if such growth remains sustainable and whether it will loom as a potential threat to brick-and-mortar casinos.