Online Gambling Grows, but Does Not Expand

The Associated Press published a report showing that while online gambling numbers have been slowly growing in the three states where it is legal, the online industry has not seen the expected expansion into other states after more than two years. That expansion could finally come in 2016.

Despite slow growth for online gambling in New Jersey, Nevada and Delaware, the online gambling industry is still hampered by a lack of expansion into more states.

That was the conclusion of an Associated Press report on the health of online gambling more than two years after going live in the three states that have legalized it.

Online gambling revenue is increasing in New Jersey and Delaware. Nevada, doesn’t report Internet revenue separately.

But despite that, revenue projections for online gambling were badly off target. In New Jersey, Governor Chris Christie initially projected that online gambling would bring in more than $1 billion a year. The actual amount was about 12 percent of that, according to the AP report.

“Internet gambling revenue in Delaware, Nevada and New Jersey badly missed initial forecasts, which themselves were overly aggressive,” Chris Krafcik, research director for Gambling Compliance, which tracks gambling legislation nationwide told the news service. “The negative P.R. that resulted, fair or not, really took the wind out of the expansionary sails.

San Francisco-based Gambling Compliance predicts either California or Pennsylvania will approve Internet gambling in 2016, followed by New York and Mississippi in subsequent years. In 2016, the group projects, nine states will consider legalizing it, though not necessarily act to approve it, according to the report.

According to the report:

New Jersey launched online gambling on Nov. 25, 2013, and took in $122 million in its first full year. Over the first 10 months of this year, the Atlantic City casinos have already equaled that total, with their Internet gambling revenue up 17.6 percent from the same period last year.

Delaware won $1.4 million in fiscal year 2014; $1.8 million in 2015, and $500,000 so far this fiscal year, which runs from July through June.

PokerStars, the world’s largest Internet poker site, will begin operating in New Jersey in the first half of 2016, and many industry executives expect it to grow the market.

New Jersey has also been working to iron out some initial problems with geolocation technology—players must be physically in the state where the sites are located—and payment processing. But do far, only two people were found to have successfully placed a bet outside of the state, New Jersey regulators said. The state confiscated money in their accounts totaling about $1,000.

In the meantime, the state’s online sites—which must be partnered with an Atlantic City casino—have been helping the resort’s bottom line.

“The market was smaller than a lot of people predicted, but the market is growing pretty nicely now,” said Tom Ballance, president of the Borgata, Atlantic City’s top casino and its leading online winner.

Internet gambling has generated $6 million in earnings for the Borgata over the first three quarters of this year, Ballance said.

“In Atlantic City, $6 million in profit is not easy to come by,” he told the AP. “We’ll take that anytime.”