Although the legal landscape for online casinos in the U.S. is still a patchwork, where each state individually has their own regulations regarding online gambling, the legalization on federal level has triggered widespread discussion regarding its economic impacts. At present, more than half the state in the U.S. offers some form of legalized online gambling, which has been a shift presenting substantial economic opportunities. 

The industry continues to expand, and stakeholders must navigate a complex landscape which is shaped by regulatory frameworks, technological advancements, and evolving consumer behavior. 

The rise of online gambling in the U.S.

Since the Supreme Court’s 2018 decision to remove the Professional and Amateur Sports Protection Act (PASPA), the landscape for online gambling has transformed. PASPA was the law that previously banned sports betting in most states. After this ruling, the road was paved for states to regulate online gambling, resulting in a rapid expansion of online casinos. As of 2024, 30 states have legalized online sports betting, and many also allows online casino games, including favorites such as poker, online slots, and table games. 

According to the American Gaming Association (AGA), the U.S. online gambling market generated $60.42 billion in revenue in 2022, including traditional casino games, sports betting, and iGaming. This growth is a product of increased accessibility of online platforms, a shift in consumer behavior towards digital entertainment, and advancements in mobile technology. Projections suggest that the online gambling market could surpass $110 billion by 2025, making it a high-level game of economics. 

Economic benefits of online casino legalization – job creation and economic stimulus

One immediate economic benefit of online casino legalization is the job created as a product. Upholding an online gambling industry requires a diverse workforce, with the need for professionals within various sectors including software developers, cybersecurity experts, marketing professionals, customer service representatives, and compliance officers. Some of the most prevalent online casino states includes New Jersey, Pennsylvania, and New York. The economic benefits of the online casino industry are apparent in New Jersey, one of the first states to legalize online gambling. The online gaming industry in New Jersey supported approximately 6,000 jobs in 2022, which both provided an income for thousands of residents, and stimulated local economic through increased consumer spending. 

Another positive side of the online casino industry is the generation of tax revenue for states. Take New Jersey as an example again, in 2022 the state collected $487 million in tax revenue from online gambling. This is funding that then goes to fund public services. Another state that has embraced the online casino industry is Pennsylvania, which reported $466.4 million in tax revenue from its online casinos in 2022. 

Boosting ancillary industries

It is not only within the online casino industry that the legalization has had great economic impacts; it has also had a ripple effect on ancillary industries. This is especially true for the tech sector, which has benefited from the demand for secure and user-friendly online gambling platforms. Various companies specializing in software development, cybersecurity, and payment processing have seen an increase in business, stemming from the online casino industry. 

Another industry that has felt the economic impact of the legalization of online casinos is the marketing and advertising industries. The surge in demand is a product of online casinos competing for the market share. In 2022, advertising spend in the online gambling sector reached $725 million, which is a significant increase from previous years. 

Increased consumer spending and entertainment options

Another consequence of the legalization of online casinos is increased discretionary spending, since online casinos have expanded entertainment options for consumers. A study shows that U.S. consumers spent approximately $157 billion on gambling activities in 2022, with a significant part of it being for online casino. 

Another positive development is the introduction of innovative gaming experiences, including live dealer games and virtual reality (VR) casinos. These options have attracted a broader audience. This increased variety and accessibility of games has resulted in higher consumer engagement and spending, leading to an increase in the industry’s economic impact. 

Challenges and concerns

Despite the economic benefits, the legalization of online casinos also entails some challenges and concerns. One is the consequence of the rapidly growing online gambling industry: the outpacing of regulatory frameworks in many states. Some states are still struggling to find a way to effectively regulate the industry. The primary reason for this is the challenge of ensuring that online casinos comply with anti-money laundering and know-your-customer regulations. It is the anonymity of online transactions that poses a significant risk to the integrity of the financial system, as it makes it easier for illicit activities to occur. 

Another challenge is the potential for an increase in problem gambling. Convenience and accessibility can make it easier for individuals to develop gambling addictions. This has led to various states implementing responsible gambling measures, including elements such as self-exclusion programs, deposit limits, and mandatory breaks for players. Lastly, there is the concern of market saturation. Since the market is becoming increasingly saturated, the competition among operators is intense. Competition can have positive effects such as driving innovation and improvement of the quality of services but is can also have negative effects on smaller operators who might struggle to compete with bigger companies. 

However, with the increased demand for online entertainment, these challenges and concerns are expected to be addressed within the near future, to further allow for the rapid growth of the online casino industry in the U.S.