Online gaming revenue rose by 32 percent in New Jersey in 2016 and that growth is likely to continue at a slower rate of 17 percent according to a study by industry research firm Eilers & Krejcik.
The slowdown will come largely because the state’s pool of online poker players has leveled off, the study said, which predicts online poker revenue will fall 6 percent.
“There’s not really enough players in New Jersey alone to support an online poker market,” said co-author Chris Grove, a senior consultant at Eilers & Krejcik.
The study also looked at the impact of PokerStars launching a site in the state.
“Poker revenue appears to have hit a wall despite the much-anticipated launch of PokerStars,” the study said. “Ultimately the lion’s share of PokerStars’ growth came at the direct expense of Borgata / Party and WSOP / 888. With roughly one full year in the books, we believe it’s safe to now conclude what we originally assumed would be the case: PokerStars has had a meaningful, but not transformative, impact on the NJ online poker market, which rose 11 percent year-over-year.”
State gaming regulators reported that online gaming revenue for the state in 2016 was $196.7 million in 2016, up 32.1 percent from 2015. The New Jersey market, however, is largely driven by online slots and casinos games. The report predicts play on slots and casino games will increase about 20 percent in 2017.
All in all, the study predicts New Jersey will get about $40.2 million in taxes from online gambling in 2017.
The study suggest New Jersey could increase online poker play would be through an agreement to share players with Nevada and Delaware, the two other states that allow online gaming. State regulators have said they are exploring that option.
Still, even if all three states shared players, there still wouldn’t be enough players for “a healthy online poker eco-system,” Grove said.
The study says that legislative efforts to expand online poker to states such as Pennsylvania and New York will be the key to whether online poker can get a solid footing in the U.S.
In an important finding, however, the study found that online casinos are driving new players to Atlantic City’s casinos.
“The big winners in New Jersey’s online gambling markets are familiar names, with land-based brands like the Golden Nugget, Borgata, Tropicana and Resorts leading the way,” the report said. “Increased integration between the online and live casino appears to be driving additional play and visitation at land-based properties.”
