The Cashout: Do Online Casinos Hurt Land-Based Casinos, Revisited
Gambling roundup: Kalshi integrating with brokerages and launching new sports; Arizona regulator says sweepstakes casinos are illegal
TCL will offer market analysis in the US gambling space in The Cashout every Friday to paid subscribers, along with a news roundup for free subscribers.
With a variety of states taking up online casino legislation in 2025, the conversation about online casinos hurting land-based casinos is back with a vengeance. Sometimes it’s hard to separate the signal from the noise. I’ll take a closer look in this week’s Cashout.
But first, here’s AN EXTREMELY BUSY Friday roundup (if you are a paid subscriber scroll WAYYYY down for that content):
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Gambling news roundup
Kalshi launches four new sports markets (Kalshi): Kalshi's rollout of a sports trading product continues with four more markets that went live this morning:
Men's and women's French Open champions
Champions League winner
League of Legends world championship winner
It's an interesting batch, especially getting into esports; we're going to see more in the coming days and weeks, I am sure.
The initial rollout of Kalshi's product is it's much more compelling to users as a live trading/betting product, when competitions are going on.
If you want to follow the predictions market industry, here’s a new weekly newsletter, Event Horizon, I started.
Kalshi Will Open Its Bets to Brokerages (NYT): Maybe Event Horizon needs to go daily already. “Kalshi is expected to announce on Friday that users will now be able to buy into its prediction markets directly from brokerages, just as they can purchase stocks or cryptocurrencies. ‘Over time, integrating with brokers will enable the 160 million Americans who own stock to access prediction markets,’ Tarek Mansour, Kalshi’s co-founder and chief executive, said in a statement. ‘Kalshi is committed to growing prediction markets into a trillion-dollar asset class — and we are not going to stop building until we do.’”
Are sweeps competition for regulated gambling?: One of the main arguments that the sweepstakes industry uses to be left alone (outside of legal ones) is the idea that they aren’t really competition for regulated gambling. So I found it interesting that Brad Allen at Eilers & Krejcik put one niche of the sweepstakes industry — sports betting exchanges — in a bucket that is competitive (emphasis added by me): “Even “soft” books have big limits, and sweeps exchanges have proliferated and are taking decent volumes across 40+ states. That means a sharp book is only taking bets a) from sharp customers, and b) when they are top price against all those other options.” Substack here, LinkedIn post here.
Meanwhile, more bad news for sweeps in Arizona (first reported by SBC Americas): “The Arizona Department of Gaming (ADG) is taking a stance against illegal online sweepstakes and casino platforms that are accepting customers in the state. The ADG has released a PSA providing Arizona residents and visitors with resources and tips for safe and responsible gaming in the state. The ADG is urging bettors in the state to proceed with causing when engaging with online casinos and sweepstakes platforms.”
Here’s the full news release from the ADG. “Illegal online casinos and sweepstakes platforms present themselves as legitimate platforms, aiming to exploit players by offering illegitimate or illegal gaming services. However, many of these operations are not legal or regulated, leaving users vulnerable to fraud, identity theft, and other serious risks. Due to their unregulated nature, ADG is unable to resolve complaints and disputes arising from unregulated and illegal gaming sites, leaving victims with little to no chance of recovering lost funds. In light of these developments, the Arizona Department of Gaming urges residents to verify the legitimacy of any online gaming platform before engaging in play.”
It’s at least interesting that this came soon after the licensing of the BetCris brand as a regulated sportsbook in Arizona, given the brand’s history in the US.
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Investment firm calls out Penn Entertainment on online gambling and more (HG Vora press release): If you want to read a scathing takedown of Penn on Barstool, ESPN Bet and beyond, check out this release from HG Vora on its effort to appoint three independent directors: “HG Vora believes there is significant unrealized value in PENN's regional casino portfolio and collection of Interactive assets. However, PENN's Board has numerous deficiencies which have translated directly into abysmal returns for shareholders. Over the past four years, PENN's shares have declined -81%, dramatically underperforming the S&P 500 Index and its closest peer, Boyd Gaming, which have returned +69% and +73%, respectively, over the same period.
Parag Vora, Founder and Portfolio Manager of HG Vora, said: ‘PENN's Board has overseen a misguided Interactive strategy that has resulted in the reckless spending of nearly $4 billion – greater than the Company's entire market capitalization – on overpriced, poorly negotiated M&A transactions and media partnerships that have resulted in large ongoing operating losses due to an inability to execute. The Company's Interactive strategy has been an abject failure due to a pattern of overpaying, overpromising, and not delivering.‘To date, there have been no repercussions for the Board's persistent bad judgment and disappointing shareholder returns. We believe this is in part due to PENN's weak corporate governance, which disenfranchises shareholders and entrenches board members while rewarding its CEO with excessive compensation.’”
Troy Aikman urges NFL to get calls right amid gambling partnerships: ‘We owe it to the fans’ (Awful Announcing): Interesting insight here from a former NFL quarterback and one of the most visible broadcasters in the sport. “I know the officials have a tough job,” Aikman said. “I mean, the scrutiny that they’re under. As we’ve gotten more advanced with instant replay, those guys, it seems, have become more and more scrutinized. And the game has not become less controversial, the game has become more controversial. I just think that we’re at a point that this has tipped a little bit because the league is partners with a number of these gambling services.” More of Aikman’s comments on the link.
More on the brewing NBA scandal:
My thoughts in The Takeaway from yesterday
One talking head suggests a ban on all prop bets, which is a terrible idea and also won’t happen: Awful Announcing.
As people lose their minds over this happening in what appears to be the legal/regulated market (and no one has yet been proven guilty of anything), it’s worth noting you can bet player props at offshore sites and at fantasy pick’em apps as part of a parlay as well.
Feds: Mizuhara wasn't a gambling addict before Ohtani thefts (ESPN): ‘Ippei Mizuhara is due to be sentenced Feb. 6 after his June guilty plea. Last week, he asked U.S. District Judge John W. Holcomb for an 18-month sentence, instead of the nearly five years prosecutors seek. Mizuhara said he was remorseful and blamed the crime on what he called a ‘long-standing’ addiction to gambling in which he ‘frequented casinos four to five times a week.’ But in their new response, prosecutors doubled down on their sentencing recommendation and said their research showed there was no evidence of a long-standing addiction other than Mizuhara's "self-serving and uncorroborated statements to the psychologist he hired for the purposes of sentencing.’
Licensed online sportsbook considered taking bets on US annexing Canada (Canadian Gaming Business): “CBC News reports that the brand was set to post odds on whether the U.S. will annex Canada by the end of Trump’s second term. However, a public relations firm’s representative told the news organization that the proposed unique market was reportedly abandoned due to undisclosed ‘compliance’ concerns.”
Mississippi online sports betting passes first hurdle, set for bigger vote (Clarion Ledger): “A bill that would provide "online race book' and ‘online sports pool’ betting in Mississippi passed out of committee on Wednesday and is set for a larger chamber vote. The bill would only allow for online sports betting anywhere in the state but not for anyone outside of Mississippi. All players would have to be older than 21 with an age verification process. Any sports betting platform would have to partner with an actual brick-and-mortar casino.”
Kambi Group plc secures licensing approval in Nevada (Kambi PR): “Kambi Group plc (“Kambi”), the home of premium sports betting solutions, has received approval for its Nevada gaming licence applications, marking a significant step towards launching in one of the world’s most iconic betting markets. …The licences will enable Kambi to provide its industry-leading sportsbook technology and services to nonrestricted gaming establishments in Las Vegas and across the state of Nevada for the first time. With limited B2B competition in the state due to the high regulatory requirements, Nevada presents Kambi with future growth opportunities in line with its strategy to expand its footprint across the Americas.” Kambi tells TCL that there are no deals in the state to announce yet.
Bet365 growth in betting on women’s sports: Some interesting data from Bet365, per Trading Leader Aron Wattleworth: “Action on sports in general is up, and specifically it’s been very encouraging to see the growth in popularity for some women’s sports leagues that have been around for some time, but haven’t garnered the attention they deserve. Women’s college basketball is extremely popular now, whereas it wasn’t nearly as popular two to five years ago. The numbers in the WNBA show that their potential now and for the future is huge. Our WNBA action has grown over 67% globally, with some regions in NA showing over 100% growth.”
Finally, online casinos vs. land-based
That was a lot of news. Deep breath.
So people were yelling at each other in Maryland this week, debating whether online casinos would hurt the existing land-based casinos if they were legalized. (Backstory here.)
People have been yelling at each other about this almost as long as I have been writing about gambling. It’s happening despite how much money there is in online gambling, and how silly it is to keep online gambling artificially only in physical casinos.
We can all find ways to gamble online right now, whether it’s betting offshore, or buying lottery tickets via couriers, or playing fantasy parlays. The Rubicon has been crossed; the only decision left is whether we’ll start to legalize and regulate and tax it.
I wrote about it a few months ago. I think the data is pretty compelling that LEGAL online casinos are not ever going to materially damage land-based casinos, or even hurt them substantially. When you factor in the upside of online casinos — literally billions of GGR annually — it should be a no-brainer.
I also agree that either side can probably make the data say whatever they want. You can squint and find ways to say that online gambling is hindering growth of land-based casinos in some places. The truth of the matter is that the factors impacting land-based gambling can be complicated, and parsing those factors vis a vis the impact of regulated online casinos can be difficult.
Let’s start before the paywall with some interesting non-gambling data to inform the discussion, something passed along to me via LinkedIn:
You can find similar data and stories about this if you look around. The bottom line — and I am not telling you something you don’t know — is Covid created a paradigm shift. While that number on minutes per day will keep coming down, we aren’t going back to 2019 any time soon.
If you’re a physical establishment in the world, you’re competing for a smaller share of the average American’s time. It’s also one of the many points of variance that makes it hard to figure out what is going on with land-based casinos, which can’t be entirely immune from this. Given the macro, you can argue it’s actually amazing that casinos have been as resilient as they have been.
For the big launches outside of New Jersey, online casinos launched mainly around the Covid era: Pennsylvania in 2019, West Virginia in 2020, Michigan and Connecticut in 2021. We’d probably have a lot better sense of the impact of online casinos in a world where the pandemic never happened.
Back to gambling data: The American Gaming Association put out its monthly update on commercial gambling revenue. Let’s dig into it a bit more.
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