Skip to content

Jeff Ifrah Provides Commentary to Flawed Op-Ed on Cannibalization of Online Gaming

Online Gaming Has Proven Economic Benefits: Opinion

By Jeff Ifrah | PennLive

In a recent opinion piece for another news organization, a Franklin & Marshall College associate professor named Jeffrey Podoshen made the baffling claim that online gaming “cannibalizes” revenue from brick-and-mortar casinos.

According to a recently released peer reviewed study conducted by independent researchers Alan Meister, of Nathan Associates, and Gene Johnson, of Victor Strategies, on the “Economic Impact of New Jersey Online Gaming: Lessons Learned,” there was no cannibalization of land-based casinos in New Jersey over the past three years that online gaming was legal in that state.

According to Meister, this is the same result that has been seen in previous studies.

Opponents to online gaming do not seem to understand that adding an online component to land-based casinos has had the effect of expanding the client base, revenues and audience of gaming in New Jersey.

Online gaming brings a player to the online table; it does not transform a land-based player into an online player.

Last year, I founded an association of online and land-based gaming companies iDEA (iDevelopment and Economic Association) to fund unbiased academic research which could counter the doomsday arguments propagated by opponents like Professor Podoshen.

Various business interests seeking to protect their own interests make unfounded and untrue claims about online gaming to achieve their own ends, not because they are truly interested in generating more jobs, more tax revenue or a stronger economy for the state.

Here is a case in point. In the undisputed Meister/Victor Strategies research based on over three years of legalized online gaming in New Jersey, this new industry has generated $998.3 million in revenue; 3,374 jobs; $218.9 million in wages to employees; and $124.4 million in tax revenue to state and local governments.

The study also found that concerns raised in New Jersey during the initial legislative debates were unfounded.

There has not been a single major incident of online cheating or player fraud reported and incidents of cybercrime have been extremely rare.

Instead of so-called “cannibalization,” online gaming is expanding the marketplace as gaming corporations are choosing to expand into verticals. Online gaming brings in consumers beyond those who enjoy placing their bets at land based tables and slot machines.

By widening the scope of their offerings to new customers, including a younger and more tech-savvy demographic, traditional casinos can grow their markets, add to revenue streams and create more ancillary jobs, often in the high paying technology sector.

At a time when Pennsylvania desperately needs to find new revenue sources, the position held by opponents is irresponsible.

Statistics and revenue calculations do not lie. The research clearly demonstrates that iGaming can be effectively regulated and channeled into positive job growth, income and tax revenue.

Now that the facts are plainly available, I call on the Associate Professor Podoshens of the world to stop the smear campaigns and get down to what really matters: legalizing online gaming to generate much-needed tax revenue, jobs and economic growth for the state of Pennsylvania.

Jeff Ifrah of Ifrah Law PLLC is nationally recognized in the area of gaming law. He is a founding member of iDEA (I-Development and Economic Association), an association seeking to grow jobs and expand online interactive entertainment business in the United States through advocacy and education