Online Gaming Surge Contributes to US Commercial Gaming Revenue Breaching $16 Billion for the Second Successive Quarter

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A noticeable surge in online gaming contributed to the US commercial gaming industry recording revenue of more than $16 billion for the second quarter in a row recently. Revenue for Q2 of 2023 was recorded as $16.07 billion.

This figure encompasses revenue from traditional casino gaming activity, sports betting, and iGaming. It’s the second-highest figure the industry has achieved for a single quarter and marks the tenth successive quarter of growth.

Nationwide gaming revenue grew year on year

The American Gaming Association provided data showing that revenue in Q2 grew 8.1% year-on-year compared to 16% year-on-year growth in Q1, which resulted in record quarterly revenue of $16.6 billion.

Online gaming revenue surged by 43.1% year-on-year in Q2, 2023. This surge was largely driven by the launch of sports betting markets in Kansas, Maryland, Massachusetts, and Ohio which happened in the last year. In contrast, land-based gaming was reasonably flat.

The less crowded sports betting calendar meant that despite the surge, online gaming held a lower share of overall commercial gaming revenue than in Q1. However, it still accounted for 22.9% of overall revenue for the quarter.

Compare that with land-based gaming, which accounted for around 74.5% of the overall revenue for commercial gaming in the US, having achieved a revenue figure of $12.38 billion. This represented a relatively flat -0.3% change from Q1.

This growth of interest in online betting and gaming can also be seen in the numbers of people playing at sweepstake casinos like those in this guide with sites mentioned. These sites give people an opportunity to play casino games like slots, blackjack, poker, and roulette without using real money. Instead, players bet and win virtual coins. There is also a social aspect to these casinos, with players able to communicate with each other online.

The fact that the number of people playing at sweepstake casinos, also known as social casinos, has grown in recent years is a further indication of the appetite for online gaming in the US. This appetite has led to an increase in revenue for many states, as well as across the country.

Increase seen in revenue seen at the state level as well as nationally

Looking more closely at state-level commercial gaming revenue, 23 of 34 states that had legal betting and iGaming in place a year previously achieved increased revenue compared to Q2, 2022. Of these states, Massachusetts and Virginia achieved all-time single-quarter records. These records were due to a combination of increased sports betting and land-based casino activity.

Of those states and areas where revenue contracted, Washington DC was the biggest loser at -9.1%, with Florida, Indiana, Iowa, and Mississippi reporting contraction figures of between -1.6% and -6.2%. Other states where revenue fell had a contraction rate of less than 1%.

The expansion of gaming creates a tax windfall for state and local governments

As commercial gaming revenue has increased, so has the level of taxes paid to governments at the local and state levels. The sum of these taxes for Q2 was $3.62 million. This figure represents a growth rate of 9.6%, which is higher than the 8.1% growth rate for commercial gaming revenue. This reflects the surge in sports betting and iGaming, which are often subject to higher tax rates.

Given the recent high levels of revenue growth year-on-year, it seems likely that governments will continue to benefit from these tax windfalls as revenue grows further. This is especially likely to be the case if more states launch a legal sports betting market, online casino market, or both.