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

Recent Opinion Piece Misstates Academic Research on New Jersey Impact

I was baffled to read Associate Professor Podoshen’s editorial claiming that online gaming “cannibalizes” revenue from land-based casinos. I would think a professor would review existing research before accepting the job of writing an opinion piece.

According to a recently released peer reviewed study conducted by independent researchers Alan Meister, Ph.D., 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 Dr. Meister, this is the same result that has been seen in previous studies.

Podoshen does 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, as Mr. Podoshen suggests in his unfortunate and inaccurate Starbucks analogy.

Last year, I founded an association of online and land-based gaming companies iDEA (iDevelopment and Economic Association) to fund unbiased academic research for just the reason Mr. Podoshen highlighted today: 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, similar in tone to Podoshen’s inflammatory claims, 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.

Unlike Associate Professor Podoshen’s specious analogy to Starbucks and the Gap at the mall, gaming corporations are choosing to expand into verticals like online gaming in order to expand their marketplace. Online gaming brings in consumers beyond those who enjoy placing their bets at land based tables and slot machines.

By expanding their offerings to new customers, including a younger and more tech-savvy demographic, traditional casinos can widen 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 like Professor Podoshen 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.

To read the full report “Economic Impact of New Jersey Online Gaming: Lessons Learned,” click here.

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