Happy Thanksgiving from GGB; Newsletter Returns December 4

New Jersey Still Bullish on Online Gambling

Despite lower than predicted revenue numbers for the first weeks of online gambling in New Jersey, many officials are expecting to see the fledgling industry grow in 2014 as online sites fix technical problems which have plagued the early going and as more marketing campaigns are launched.

Despite what appeared to be signs that online gambling was off to a strong start in New Jersey, recent revenue figures for the first six weeks of live gambling were disappointing.

The state’s approved online sites took in $8.4 million from November 21—when online gaming launched its initial test phase—to the end of 2013. Those figures played out over 12 months would leave the state taking in less than $100 million, well short of the $200 to $300 million most analysts predicted for the first year of online gambling.

But many casino officials say the numbers will only get better as the fledgling industry grows.

“Everybody needs to take into consideration that this industry is in its infancy,” Tony Rodio, president of the Tropicana Casino and Resort told the Associated Press. “There will be mobile applications, and a lot of the slot content isn’t operational yet. I’m encouraged by how many user accounts that people have signed up for and that there’s interest in it. You’ll see this grow quickly.”

As of January 12, users had created 155,374 accounts with New Jersey gambling sites. That figure does not represent total players, as many players have created accounts at multiple sites.

It’s possible that number could have been higher, however, as many sites have had serious technical problems signing up new players. Along with glitches to geolocation programs—players must be physically located in New Jersey to gamble—and log-ins, transferring money into accounts remains a problem as many credit card issuers refuse to process online gambling transactions.

Two online sites—GoldenNugget.com and Virgincasino.com—purposely waited to go live with real-money wagering to work out those problems. Golden Nugget went live last month and Virgin Casino was scheduled to go live late last week.

Though marketing campaigns have begun for several sites, most are just getting started and the industry expects to do a better job of getting the word out about online gambling in 2014.

So far, two companies are dominating the online market. The Borgata Hotel Casino & Spa—which is partnered with the Party Poker online brand—took in more than $3.7 million while Caesars Interactive, which runs sites including the WSOP and 888 brands, won nearly $2.4 million.

It’s worth noting that along with Borgata, WSOP, PartyPoker and 888 are all established online poker brands.

Other competitors were far behind. The Trump Taj Mahal Casino Resort and its Ucasino brand won $883,000. The Tropicana Casino and Resort won $748,000. Trump Plaza Hotel Casino and its Betfair online brand won $427,000 and the Golden Nugget won $179,000.

Thomas Winter, the Golden Nugget’s vice president of online gambling, told the AP that the casino is pleased with its start and is expecting substantial growth of 20 percent per month this year. Right now the casino accounts for 4 percent of New Jersey’s online market, but it expects to win seven to 10 percent of the market “over time,” he said.

Both the Nugget and Borgata officials have also released information showing that so far, online gaming is not cannibalizing players who would have gone to the brick-and-mortar casinos.

“Slightly more than 50 percent of our online customers were not regular customers at the Golden Nugget or were not customers at all,” Winter told the AP. He said long-range estimates envision that 60 to 70 percent of online players will not be regular customers of the physical casino.

Borgata has also found similar results.

“When matching our online and land-based data bases, we found that 60 percent of online casino customers had not been to Borgata in over a year, and over 75 percent had made fewer than two trips to Borgata in the past year,” Keith Smith, President and Chief Executive Officer of Boyd Gaming, part owner of Borgata said in a press release.

 “And on a combined basis, online and land-based poker revenue at Borgata was up more than 40 percent from our land-based play in December 2012,” he said. “Clearly, online gaming is complementary to our land-based business, not competitive.”

Meanwhile, Betfair has released information showing that its online site has been drawing many players from Northern New Jersey, where casinos in Connecticut and northeastern Pennsylvania have been cutting into Atlantic City’s market for several years.

The site reported that Hoboken is the top city for gamblers at Betfair followed by Jersey City, Newark, Old Bridge and Egg Harbor, according to published reports. The total number of gamblers was not released.