Little Evidence to Support Earnings Issues
Lee stated in the investor note that Macquarie feels there is very little evidence supporting that sweepstakes casinos are hindering real-money online gaming growth. In their view, the real-money sector offers a better overall experience, and growth rates in states where services are provided are still strong.
Macquarie provided information from the New Jersey online gaming industry to support its theory. The Garden State offers real-money gaming, showcasing 27% year-over-year growth in September of this year.
In New Jersey, players can access both real-money gaming and sweepstakes services. The free services clearly did not affect the real-money sector, and the analyst argues that sweepstakes casinos act as a replacement product for players who do not have access to real-money services.
Michigan Pushes Sweepstakes Exit, and iGaming Earnings Do Not Increase
In a similar report, gaming consultants Eilers & Krejcik Gaming provided information on how the removal of sweepstakes services did not help real-money online casino revenues. This year, authorities in Michigan sent out cease-and-desist letters to operators behind sweepstakes sites. Several providers left the state due to the request.
Despite removing such services, the Michigan online casino industry did not see a huge boost in earnings. In fact, it saw lower growth numbers. From January to August 2024, the state saw its second-worst growth percentage since launch, at 24.8%. In comparison, West Virginia saw over 54% growth in the same time period.
In speaking to NEXT.io, a Social and Promotional Gaming Association spokesperson pointed out that while critics make unsubstantiated claims about social gaming sites as a threat to real money online gambling, the facts do not support this fear.
The spokesman stated that most players at sweeps sites will not purchase coins, and the small number of those who do will play far smaller amounts than they would at a real-money casino.
Lee argues that sweepstakes sites could complement iGaming services and provide untapped revenue sources for US states. Lee showcased this theory by discussing how daily fantasy sports helped provide a path for legalized sports betting.
