Recent data shows that iGaming GGR is substantially higher than Gross Gaming Revenue generated from Sportsbooks across all five jurisdictions. As such, when considering which market vertical(s) an operator should invest in, the choice seems to be clear.

The Revenue Gap at a Glance

Why iGaming Generates More Revenue

The reasons for the structural dynamics (and therefore why there is) a gap between iGaming GGR and sports betting GGR are known very well within the gaming industry. Although, it appears these structural dynamics are often ignored or overlooked during public discussions regarding the potential growth of gambling through iGaming.

There are several consistent factors which contribute to iGaming GGR exceeding GGR generated by sports betting:

• Hold Percentage: Casino games available online have an inherent margin / house edge of 3-15% based upon the type of vertical. Typically, slots will hold at a rate of 6-8%, while sportsbooks will generate a margin of around 7-9% of handle. However, note that “handle” and “GGR” (gross gaming revenue), are not the same number. For example, when you take a bet of $1000.00 and the winner takes home $950.00, then your gross gaming revenue would be $50.00, not $1000.00.
• Session Length & Frequency: Players of casino games (slots and table games) tend to participate in longer, more frequent session lengths than players participating in sports betting. Since the majority of sports bets are tied into the schedule of sporting events, sports bettors can only place wagers at specific times.
• Breadth of Product Offerings: Most iGaming library offerings exceed 1,000 different titles per individual operator. The continuous flow of new products being released by suppliers such as Evolution Gaming, Pragmatic Play, NetEnt and others provide for a continued ability for casinos to retain player interest and participation.

Sports Betting’s Limitations Are Coming Into Focus

While the United States’ first national gaming vertical (sports betting) after the repeal of PASPA in 2018 experienced high levels of marketing spend by operators and consumer engagement, there were significant structural issues that were less visible at the time.

The total amount of money wagered on sports (“handle”) in U.S. states with regulated sports betting has continued to increase – with NJ crossing over $11 billion in bets taken in 2024, however, Gross Gaming Revenue (GGR) has increased at an inconsistent rate. While the creation of same game parlay products and “live” betting have expanded margin somewhat; the major issue is still that a very high percentage of all wagers placed will generate lower revenue than the same amount of dollars spent on casino games.

Implications for State Expansion Debates

More than a dozen other states now appear to be drafting their own laws for legalizing Internet-based gaming. Some of those states include Illinois, Indiana, Maryland and New York. Historically, estimates regarding how much money would flow into state coffers as a result of online gambling legislation have used analogies to sports betting (the amount of money wagered), however, using an analogy based upon iGaming has become more relevant.

The difference between New York and its sports betting model cannot be overstated. Sports Betting was introduced in Mobile Form on Jan. 8th 2022 and New York had already broken National Handle Records just one week later. Online Casino Gaming is still prohibited in the State of New York. It is estimated by both Fiscal Analysts working with the State of New York as well as Independent Research Firms that if the State were to legalize online casinos, it would produce anywhere from 1.5 Billion to 2.5 Billion Dollars per year in Gross Gaming Revenues (GGR) which would be capable of surpassing and/or matching the total gross gaming revenues produced by all forms of sports betting in the State in less than three years after launching.

Legislators consider this when evaluating taxation on online casino revenue. All states that permit iGaming tax the gross gaming revenue generated by online casinos 15-25%. As long as iGaming generates large sums of GGR, the potential tax revenue available to legislatures will also be substantial (potentially hundreds of Millions). This will generally exceed the tax revenue produced by sports betting taxes in even fully developed markets.

What This Means for Operators

The igaming margin advantage has become a major part of the narrative for multi-vertical operators – DraftKings, FanDuel, BetMGM, Caesars and many others – when discussing adjusted ebitda margins in igaming have been running substantially higher than those for sports betting at scale. Furthermore, operators that have established a large number of casino players in legal jurisdictions are showing better overall unit economics compared to sports-only competitors.

Also, the igaminlandscape is changing. igwho invested significant resources into developing high-quality casino products and deepening casino content in the early legal markets versus focusing on sports betting as their primary acquisition product are now enjoying the benefits from mature player databases which demonstrate casino activity. This type of advantage does not lend itself well to replication by late market entrants.

It is clearly evident: As more U.S. states legalize gaming and operators continue to optimize their product offerings, online casino revenue will begin to significantly contribute to defining the financial success story of the U.S. igaming industry. Sports betting created the public awareness that has led to an increase in igaming consumers. Online casino is creating the bottom line growth.