US Online Casino Growth Slows After Early 2024 Surge

The U.S. online casino industry, which experienced a notable surge in growth earlier this year, has seen a slowdown in April 2024, potentially signaling the end of a short-lived period of acceleration. After a strong performance in February and March, recent revenue reports indicate a decrease in the annual growth rate, aligning with traditional seasonal trends.

Online casinos in the U.S., excluding Rhode Island, generated $654 million in April. Rhode Island's yet-to-be-reported figures are expected to add approximately $3 million, bringing the total to around $657 million. This represents a significant drop of over 5% in the monthly change in daily average revenue, marking what could be the worst single-month decline in 2024.

April often marks the beginning of the summer slump for both iGaming and sports betting, with the sharpest drops usually occurring later in the season. Despite this downturn, the annual growth rate remains at 23.6%, higher than all but three months of 2023 but a notable decline from February's peak of 26.4%.

Key Points

1. April 2024 Slowdown:
   • The US online casino market experienced a significant slowdown in April 2024, with a drop in the monthly change in daily average revenue, potentially indicating the end of a brief surge earlier in the year.
2. Annual Growth Rate Decline:
   • Despite the slowdown, the annual growth rate in April remained at 23.6%, higher than most months in 2023 but down from February's peak of 26.4%.
3. State Performances:
   • Pennsylvania, Michigan, and New Jersey led in revenue generation, with Pennsylvania maintaining alignment with projections, Michigan closing the per capita revenue gap with New Jersey, and New Jersey consistently exceeding projections.
4. Market Dynamics and Leaders:
   • FanDuel Casino's rapid growth, along with broader macroeconomic factors, likely contributed to the temporary surge earlier in 2024, highlighting the market's resilience and adaptability amidst changing conditions.

The online casino market has been performing above expectations. In 2022, the full-year revenue growth was 34.8%, which fell to 22.8% in 2023. Projections for 2024 estimated a further decline to 19.3%, but monthly performances have consistently exceeded these forecasts, with the exception of January.

State-by-State Analysis

Pennsylvania: Leading the Big Three states, Pennsylvania's online casinos and poker rooms earned $212.2 million in April, a 26.9% year-on-year increase. This performance aligns closely with forecasts, with the state's revenue marginally outperforming expectations by 0.8% year-to-date.

Michigan: Michigan reported $192.9 million in revenue, up 21.1% from the previous year. Despite a 7.3% month-on-month decline in daily average revenue, Michigan continues to close the per capita revenue gap with New Jersey, potentially becoming the top-performing state by this metric later in the year.

New Jersey: New Jersey's online casinos and poker sites generated $187.9 million, marking an 18.2% annual increase. The state's daily average revenue saw a slight 1.6% drop from March, maintaining a steady growth rate within the 18-20% range since December.

Connecticut: Connecticut's online casino duopoly earned $41.5 million in April, up 30.4% year-on-year. The state's daily average revenue decreased by 3.2% month-on-month, and it remains the only state underperforming its forecast by 6.8%.

West Virginia: West Virginia's online casinos brought in $17.8 million, reflecting a 36.6% year-on-year increase but an 11.1% drop in daily average revenue month-on-month. Despite this, the state's revenue continues to exceed projections by 8.0%.

Delaware: Delaware reported $4.4 million in revenue, a 243.1% increase year-on-year. The state's daily average revenue slightly decreased by 1% from March, with online slots accounting for 74.2% of the total revenue.

Industry Dynamics and Market Leaders

The slowdown in growth can be attributed to the natural decline in customer acquisition following the initial buzz of iGaming legalization and the COVID-19 pandemic-driven shift to online gambling. The temporary reversal in this trend earlier in 2024 may be linked to FanDuel Casino's rapid growth, which has outpaced rivals DraftKings and BetMGM in several states.

FanDuel's annual growth rate of 60-70% in the first four months of 2024, up from 50-60% in early 2023, has likely contributed to the market's overall acceleration. This growth suggests improved customer acquisition strategies or increased spending by existing customers, though it could also involve pulling customers from competitors.

Macroeconomic Factors

A broader macroeconomic explanation also seems plausible. The rise in the Dow Jones and Nasdaq indices from late October to mid-February coincides with the acceleration in online casino spending, suggesting economic conditions may have influenced consumer behavior.

As the summer slump begins, the online casino market's performance will likely continue to fluctuate. However, the industry's ability to consistently beat projections indicates a resilient and adaptable market. Operators will need to monitor these trends closely, adapting their strategies to maintain growth in a dynamic environment.

For now, the U.S. online casino industry remains a significant and evolving market, with Pennsylvania, Michigan, and New Jersey leading the way. The coming months will reveal whether the April slowdown is a temporary dip or the beginning of a more extended period of moderated growth.

Online Gambling Revenue Highlights — April 2024

In Pennsylvania, online casinos and poker rooms generated $212.2 million in April 2024, reflecting a 26.9% year-on-year increase. This was a small decline from the 28.4% growth seen in March. The daily average revenue stood at $7.1 million, down 5.9% from March. Despite this drop, Pennsylvania's April performance was close to the forecast, and year-to-date, the state is outperforming expectations by 0.8%. Most operators saw a decline, except for Mohegan Sun, which surged 29% due to the switch from Unibet to its house brand. Bally's also performed well, increasing its revenue by 9.8%.

Michigan's online casino sites earned $192.9 million in April, up 21.1% year-on-year. This represented a 4.1 percentage point drop from March. The daily average revenue was $6.4 million, a 7.3% decline month-on-month. Michigan's April revenue exceeded the forecast by 2.4%, but this was a smaller margin than the previous month's 10.7%. Year-to-date, Michigan is 4.7% ahead of projections. Golden Nugget experienced a significant 57.5% revenue drop, while WynnBet continued its decline with a nearly 60% drop.

New Jersey's online casino and poker sites collected $187.9 million in April, an 18.2% annual increase. The growth rate has remained consistent within the 18-20% range since December, except for a spike to 27.9% in February. The daily average revenue held at $6.3 million, down 1.6% from March. New Jersey exceeded the projection by 3.7% for April and 5.1% year-to-date. BetMGM had a strong month, increasing its daily revenue by 8.2% and gaining more than one percentage point in market share.

Connecticut's online casino duopoly pulled in $41.5 million in April, up 30.4% year-on-year, and saw a 3.2% month-on-month decline in daily average revenue. Connecticut remains the only state underperforming its forecast, falling short by 6.8% in April and trailing by 2.6% year-to-date. DraftKings increased its daily average promotional spending by 18.5%, gaining nearly 4 percentage points of market share from its rival, earning 55.2% of the state's revenue for April.

West Virginia's online casinos earned $17.8 million in April, a 36.6% year-on-year increase but an 11.1% month-on-month decline in daily average revenue. Despite this, West Virginia continues to exceed projections by a significant margin, with April revenue 8.0% higher than forecasted and year-to-date revenue 8.1% ahead. Greenbrier reclaimed the top spot in market share, with its skins including FanDuel, BetMGM, and Golden Nugget Casino.

Delaware saw its first dip in monthly revenue since switching to BetRivers, coming in at $4.4 million, a 243.1% year-on-year increase. The daily average revenue was just shy of $150,000, down 1% from March. Online slots accounted for 74.2% of the total revenue. The switch from 888 to BetRivers initially reduced table game revenue, but it appears the novelty of BetRivers' offerings is wearing off, with the slot revenue ratio returning to previous levels.

Rhode Island has not yet reported its April figures, but it is expected to contribute an additional $3 million to the total U.S. online casino revenue for April 2024.

“Casino revenue in the US experienced a significant slowdown in April 2024, signaling a potential end to the brief surge seen earlier in the year. Despite this, the industry's annual growth rate remains higher than most months in 2023, reflecting its resilience amidst changing market dynamics.”

Notes on the Data

The data for this article comes from reports issued by state regulators, including the New Jersey Division of Gaming Enforcement, Pennsylvania Gaming Control Board, Michigan Gaming Control Board, West Virginia Lottery, Delaware Lottery, and the Connecticut Department of Consumer Protection. Monthly growth figures are adjusted for the number of days in the month, representing changes in daily average revenue.

As the online casino industry continues to evolve, these figures provide a snapshot of the market's current state and future potential. Operators and analysts alike will be closely watching for further developments and trends in the coming months.