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What is iGaming? A Complete Guide

Gaming
May 29, 2024
Morgan Shearer

There’s a wide variety of terminology used in the fast-growing gaming industry.  

Words like “Daily Fantasy Sports”, “Sweepstakes”, “Gambling”, “Gaming”, and “iGaming” are sometimes used interchangeably—but each has a very distinct meaning in terms of offerings and regulatory requirements. 

Dive into this breakdown on iGaming for a full explanation behind the term, along with nuanced regulatory, compliance, and iGaming industry differences between popular online gaming categories.

What exactly is iGaming? 

iGaming is digital gaming with a real money component. 

The term “iGaming” is an umbrella term that encompasses any form of digital (online) gaming. Anything and everything from browser-based video games to Daily Fantasy Sports to online lotteries fall under the category of iGaming. 

However, the term “iGaming” is a bit dated. It was originally coined back in 1994, when the first online betting took place and everything done online had the letter “i” in front to signify it was “on the internet”. 

In reality, iGaming just means online gaming. However, within this broad category of mobile gaming sits a wide variety of online gaming subcategories—each with nuanced rules and differing regulatory requirements.

💡Terminology difference: iGaming vs. gambling

iGaming and gambling are not (exactly) the same thing. iGaming is digital, meaning games are played exclusively online via computers, mobile devices, or smartphones. Gambling can be done either in person at land-based casinos or online. 

iGaming also includes free to play games as well as forms of real money gaming that are not considered gambling. The key differentiator is that gambling implies a game of chance, while some forms of gaming, like Daily Fantasy Sports, are considered games of skill. Because of this distinction, gambling is regulated.

Notable iGaming statistics: 

  • iGaming revenue reached a record $66.66 billion in 2023, 10.3% higher than 2022 (American Gaming Association)
  • iGaming operations generated $14.67 billion in direct gaming tax revenue paid to state and local governments (American Gaming Association)
  • iGaming revenue is projected to reach over $100B in 2024 (Statista
  • There are expected to be over 281 million iGaming users by 2029 (Statista


Categories of iGaming

Below we’ll break down each category of iGaming: 


Daily Fantasy Sports

 

Daily Fantasy Sports (DFS) takes the skill and excitement of season-long fantasy sports, and shortens / adjusts the format to create a more immediate and dynamic experience. 

There are a wide range of DFS contest types, each with its own unique format and strategic considerations. Here’s a look at the three primary types of Daily Fantasy Sports:  

Traditional 

Participants build teams of real-life athletes from professional sports leagues. The performance of these athletes in actual games determines the participants' scores in the DFS contests and tournaments. Points are awarded based on the athletes' statistics in their respective games, such as touchdowns, goals, assists, or points scored.

Pick ‘em

Daily Fantasy Sports Pick ‘Em contests, like PrizePicks Pick ‘Em allow pick “more” or “less” on 2-6 player stats. The more correct picks you make, the more money you can earn. 

Peer-to-peer

In peer-to-peer DFS competitions, players compete against each other, rather than the house. 

An example of this format is the PrizePicks Arena game, which allows users to pick at least two players from different teams. Once more or less statistical selections are made on the players, a user’s entry is placed in a group against other users, and payouts are based on having a perfect team or the most correct selections among the fellow competitors.

Read more about PrizePicks


Sweepstakes


Sweepstakes-style online games enable players to participate in games of chance like slots, card games, and bingo for free, while still having a chance to win real money. 

Sweepstakes games (also called sweepstakes casinos, social sweepstakes, or sweeps casinos) operate on a “freemium” model, meaning games can be played either for free or via in-game purchases.

Sweepstakes games operate with two in-game currencies: 

  • Game Coins (GC): Virtual tokens that are freely available or purchasable. They function as play money for accessing games and enjoying in-game features.
  • Sweep Coins (SC): Acquired through gameplay or promotions, these function as sweepstake entries for prizes and options offering real-world rewards, like cash, gift cards, or merchandise.

Essentially, you play with Game Coins, you earn prizes with Sweep Coins. 

This sweepstakes model enables legal gaming in regions where traditional online gambling is restricted.


Online casinos


Online casinos are digital platforms that offer a variety of games like poker, blackjack, live dealer games, or slots—replicating the experience of traditional brick and mortar casinos. In an online casino, players have the opportunity to wager and win real money.

Online casinos feature a wide selection of games, offering players a complete and straightforward gaming experience. However, online casinos are only legal in a select number of states, including MI, PA, NJ, WV, and CT.


Online sportsbooks


Online sportsbooks accept online wagering on sporting events. To partake, players risk their money on the outcome of a sporting event (or any aspect of the event like player props, total points, etc.)—and try to win. 

Sports betting has been around since the 18th century, but today’s legal online sportsbooks offer players full freedom and flexibility to deposit funds, make pre-planned or live picks, cash out early, and enhance their sports viewing experience.  

The result is an online gaming format that is catching on fast. During the 2024 Super Bowl, FanDuel, an online gaming provider app that offers an online sportsbook, said it took 14 million bets totaling $307 million, both of which set records.


Online lotteries


Online lotteries allow players to participate in lottery games, including instant scratch-off tickets and scheduled draw games, from their computer or mobile device—eliminating the need to visit a physical location to purchase lottery tickets or games. 

There are two types of online lottery companies, digital state lotteries and 3rd parties like Jackpot.com that facilitate the purchase of official state lottery tickets online.

Digital state lotteries are traditional state-run lotteries that allow residents to purchase lottery tickets, participate in games, and check results via the internet.

3rd party facilitators act as intermediaries, purchasing official lottery tickets on behalf of their users or providing a gaming service centered on the outcomes of lotteries.


Frequently Asked iGaming Questions (FAQs)

Where is iGaming legal? 

Depending on the format, certain forms of iGaming, like Daily Fantasy Sports and sweepstakes, are legal in all 50 states. 

Online casinos are allowed in Connecticut, Delaware, Michigan, New Jersey, Pennsylvania, and West Virginia. 

Delaware, Michigan, New Jersey, and Pennsylvania along with Nevada additionally allow for online poker games. 

Twenty-four states and the District of Columbia allow online sports betting for players physically located within their state lines.

What is an iGaming company? 

An iGaming platform is a business that offers various forms of digital gaming services through their iGaming software interfaces. iGaming businesses provide platforms for activities like Daily Fantasy Sports, online casinos, online sportsbooks, sweepstakes, and online lotteries. 

These may be gaming operators or gambling operators that are regulated for gambling activities or iGaming models like DFS or sweepstakes. Examples of iGaming operators include PrizePicks, Dabble, FanDuel, and Jackpot.com.

What’s the best way to deposit money into an iGaming account? 

The fastest, easiest, and most secure way to deposit and withdraw funds from an iGaming account is via online bank transfer. Players simply link their bank account by securely logging into their bank, then they’re free to move money in and out seamlessly in a single click. 

Compared with traditional credit/debit card options, online bank transfers offer iGaming players:

  • Faster funding - Add funds in a single click to avoid missing a live opportunity to win.  
  • Instant withdrawals - Cash out instantly. No long wait periods while funds are processed. Get your money when you want it. 
  • Enhanced security - Log into your bank directly, guaranteeing bank-level encryption. There are also the highest levels of fraud detection, prevention, and real-time risk assessment to protect gamers and fantasy sports merchant accounts.
  • Transparency - Operators like Aeropay leverage transparency and a balanced approach to mitigate returns and maximize acceptance rates.  

Learn more about Aeropay’s online bank transfer technology for iGaming companies

Is iGaming the same as gambling?

iGaming and gambling are related as some types of gambling fall under iGaming but not all iGaming is considered gambling:  

  • iGaming encompasses all forms of digital gaming, including both free-to-play and real money games. It includes games of skill (e.g., Daily Fantasy Sports) and games of chance (e.g., online lotteries).
  • Gambling refers specifically to wagering money on games of chance, which can be done either online or in person.

Simply put, the online gambling industry / online gambling market is included within the iGaming market.


What types of games are included in iGaming?

iGaming includes a wide variety of games and gaming activities:

  • Daily Fantasy Sports (DFS): Short-term fantasy sports contests where players build teams and earn points based on real-life athlete performances.
  • Sweepstakes: Games of chance like slot games, table games, and bingo that can be played for free or via in-game purchases, often offering real-world prizes.
  • Online Casinos: Digital versions of traditional casino games such as poker, blackjack, roulette, and online slot machines.
  • Online Sportsbooks: Platforms where players can bet on the outcomes of sporting events and other aspects of the games.
  • Online Lotteries: Platforms that offer instant scratch-off tickets and scheduled draw games, allowing players to participate without visiting a physical location.

See the Aeropay difference for daily fantasy sports

With notable fantasy partners like PrizePicks, Aeropay provides embedded API-first payment processing solutions for everything from fantasy football to daily fantasy sports.

Our account-to-account payment options simplify and enhance payouts/withdrawals for your players—helping eliminate barriers to entry and keep the game going.

Notable features include:

  • One-click checkout experience
  • Guaranteed payments
  • Instant withdrawals
  • Comprehensive documentation
  • Custom branding
  • Embedded payments 
  • Full end-use support

Schedule a demo with our fantasy sports payments specialists to see what all the hype is about.

Author

Morgan Shearer

Enterprise Account Director
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