The argument about whether or not internet casinos could harm their physical counterparts is now "reductive." In a post on LinkedIn on Saturday, Craig Billings, the CEO of Wynn Resorts (NASDAQ: WYNN), stated as much.

Because the Wynn has essentially left the iGaming and online sports betting industries, and because the operator doesn't have a large portfolio of regional casinos, Billings stated that he is "neutral" on the subject. Encore Boston Harbor, one of the highest-grossing regional casino facilities, is its only venue that falls under that category.The chief executive officer of Wynn admitted that there is more to the story, even though the effect of internet casinos on the total addressable market (TAM) for their physical counterparts is significant.

 

"With the introduction of an online casino, you are allowing the entry of many new and capable competitors, often times into states that have had a very stable competitive dynamic for many years,” wrote Billings. “So, no matter which side of the ‘cannibalization vs. no cannibalization’ debate you are on, assuming that the (positive or negative) impact will be uniformly shared by all regional casinos is pretty naïve.”

 

Billings, who has worked at Wynn for nearly eight years and has spent more than twenty years in the gambling industry, continued, saying that the iGaming argument's emphasis on TAM and tax bases is narrow-minded.

 

The Role of Traditional Casinos in iGaming

For gaming enterprises, online casinos are seen as a major long-term growth prospect. However, the truth remains that just seven states—Connecticut, Delaware, Michigan, New Jersey, Pennsylvania, Rhode Island, and West Virginia—allow that type of gaming at this time.

On the other hand, Billings pointed out that there are roughly 1,000 commercial and Native American casinos in the United States. However, only about 10% to 15% claim to have an omni-channel strategy that incorporates sports betting and both online and physical casinos. 

“The properties that might actually be able to compete with the digital native online gaming providers are those that are owned by the large national gaming operators,” opined Billings. “What about everyone else?  Market share will shift.  In land-based gaming, there will be market share winners and losers. No doubt in my mind. As an operator, the TAM doesn’t pay my bills, my share of it does…” 

 

Labor Matters in the iGaming Debate

Although their online counterparts require less work, land-based casinos provide jobs—a fact that its detractors may not want to acknowledge. This demonstrates why some gaming-related unions in some states are opposed to online gambling.

One or two employees may be employed by a large-scale iGaming company for every $1 million in sales. However, according to Billings, physical casinos may hire up to five people for every $1 million in revenue.

“So, don’t expect the unions, particularly in blue states, to just sit back and let online casino happen. They will take a position, because that’s their job,” concludes Billings. “They’re not going to pore over analyst reports on cannibalization to form an opinion on the topic.  They’re going to act preemptively. And, like it or not, in many states legislators listen to unions. After all, their membership votes, early and often….” 

Four of the states that allow iGaming at the moment are referred to be "deep blue," and it would be a stretch to refer to Michigan and Pennsylvania as "purple." The only red state in the group is West Virginia. In the near to medium future, iGaming legislation may be considered in the highly blue states of Illinois and New York.