Profitability in the USA: Who makes more, the betting industry or the casino industry?

The USA has had a dramatic shift in its relationship with gambling, both for the sports betting and casino gaming sector. These changes are down to legal, societal, and technological factors that have shaken up the industry (and the country). While a tiny number of states hold firm on a total prohibition on gambling in all its forms, the vast majority now allow for wagering in one form or another.

With every state regulating its own gambling market, there are wide variances in what is and is not allowed in each state. However, only seven allow online casino gambling, but forty-four have brick-and-mortar casinos, with Las Vegas and Atlantic City being the most famous resort destinations. When it comes to sports betting, thirty-eight states plus Washington, DC, and Puerto Rico) allow sports betting for real money, while thirty states allow online sports betting via apps and website browsers.

The changes have come about for a variety of reasons. The seismic shift was a result of the Supreme Court striking down PASPA's countrywide ban on sports betting in 2018. The court ruled that the federal law was unconstitutional as states have the right to self-government on such issues. What many realized was that while gambling was officially illegal in their state, online offshore gambling sites allowed people to gamble anyway. However, rather than the state benefiting from gambling revenues through taxes and levies, all the profits were just flowing into private coffers. Meanwhile, citizens had no consumer protections and could be targeted by unscrupulous gambling companies that did not have the players' best interests at heart.

Therefore, many states held referendums to let residents decide what gambling regulation they wanted. Most people have understood that as people will gamble regardless of what laws are in place, it is better for people to do so legally and safely. Technology has made such enormous advances that most people can access online gambling sites to place bets on all the e-sports tournaments around.

Even in states where real-money betting is not allowed, social and sweepstakes casinos can be played for virtual money. Finding a new casino, whether the real money or social variety, is within most Americans' grasp these days.

So, while much of the argument in favor of legalizing gambling comes down to player safety, the other enormous motivator is money and profitability. While gamblers live in the hope that they will win big, the only guaranteed 'winners' are the companies operating the betting and casino sites (both physical and virtual). The states that license them are also dollars in, especially if they charge upfront levies and take a percentage of revenues in taxation. For the player, gambling must be regarded as a form of entertainment that has a cost attached.

Ultimately, the house always wins, but which gambling industry sector is the most profitable?

While the sports betting industry in its current format is a relative newcomer, the industry in the US has gone from strength to strength. Revenue generated has increased from around USD 400 million in 2018 to over USD 11 billion in 2023. Certain events tend to cause spikes in the betting, and the one that attracts the most attention is the Super Bowl. Over a quarter of US adults are reportedly planning to place a bet in the run-up to the next event. In New Jersey alone, there was an upsurge of over USD 60 million in sports betting revenue in January – the month preceding the big event.

However, despite the upsurge in sports betting and the relatively small number of states that allow online casino gambling for real money, casino-style gambling is the driving force behind the profitability of the sector as a whole. National gross gambling revenue reached USD 66.65 billion in 2023. Casino slots and table games account for three-quarters of that figure. The state that 'hit the jackpot' was, unsurprisingly, Nevada. Its GGR outstripped every other state and totaled over USD 15 billion. Pennsylvania took the number two slot with a GGR of USD 5.86 for the same period.

Pennsylvania is an interesting case study for gambling revenues because it offers all types of gambling. According to the state's Gaming Control Board's July figures, iGaming revenue for slots and table games was up around 32% on the previous year, but retail revenue was actually down around 5%. They report that sports wagering revenue was up around 20% for the same month of the previous year (July 2024 vs. July 2023). However, it is a much smaller slice of the overall pie. Growth is driven by increased online activity, and the only iGaming revenue that went down during the period was online poker.

As mentioned in the introduction to this piece, it is not only law changes and technology that are fueling growth in the US gambling industry. Las Vegas does not call itself "Sin City" for nothing. For a long time, there has been a moral battle over the morality of the practice, with many Americans railing against the practice on ethical and religious grounds. However, these attitudes are changing, and 49% of US adults claim to have participated in gambling in 2023, up from 43% in 2019.

In general, attitudes towards gambling have become more permissive, and 56% of adults say they found it acceptable, up 6% on the previous figure. The most popular gambling sector is the lottery, and 37% of the U.S. adult population claim to have bought a ticket and played at least once. The US gambling industry is expected to continue to grow over the coming years. As with Pennsylvania, this growth is expected to result from increased participation in online gambling. The sector is expected to grow from around USD 14 billion in 2023 to almost USD 40 billion by 2029.

However, in-person gambling does not appear to be under threat. People still love their trips to the Las Vegas strip and the full entertainment package the resort city offers to visitors. Famous for its vibrant nightlife and casinos, the city's strip provides world-class entertainment, shopping, dining, and exhibitions. Conferences draw in business travelers, and Vegas is on many traveler's bucket lists. In 2023, it attracted almost 41 million tourists, proving that online gambling might be popular, but the immersive resort experience is still a big draw.