Borgata Q2 Losses Highlight Need For PokerStars NJ Entry

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Wednesday, August 6th, 2014 | Written by Shane Larson

Despite being the biggest of all New Jersey’s online gambling operations, the Borgata lost $1.8 million in the second quarter of 2014, highlighting the challenges faced by the state’s legal internet gambling ventures. It wasn’t all bad news, however, as Boyd Gaming Incorporated CEO Keith Smith said the summer hot months were mostly to blame for the decrease in revenues and that iGaming revenues should increase once more when the cooler weather returns. In addition, Q3 has already started positively with Borgata stating that for the first time since regulation was introduced the company broke even in July.

Nevertheless, Borgata (bwin.party) represents the most successfully player in New Jersey’s online gambling industry with a 36% share of the market in June, compared to Caesar’s Interactive (27%), and The Tropicana (18%). Therefore, the likely granting of a NJ online gambling license to PokerStars can only be a positive development for New Jersey’s nascent market.

PokerStars “changed circumstances”

PokerStars found itself locked out of the USA’s regulated online gambling market after breaching the country’s UIGEA, and the company’s subsequent attempt to buy the Atlantic Club Casino and obtain a NJ gaming license on its own eventually fell through.

PokerStars may not have acquired its own casino from which to launch an online gambling site, but its partnership deal with the Resorts Casino now seems likely to bear fruit after The Rational Group, which owned PokerStars and Full Tilt Poker, sold the business to Amaya Gaming Group earlier this month. The Scheinberg’s departure and the imminent arrival of Amaya CEO David Baazov on the scene seems to fulfill the stipulation set down by the NJ Division of Gaming Enforcement that “significantly changed circumstances” must be shown before the suspension of PokerStars’ original online gambling license application was lifted.

PokerStars partners with Resorts Casino

The path thus seems clears for PokerStars to lose its “bad actor” label and obtain a NJ license together with its partner Resorts. As Pocket Fives founding member Adam Small, explains:

“The acquisition of PokerStars and Full Tilt Poker by Amaya is great news for poker players in New Jersey. It means that more than likely the top poker company in the world will soon be offering its games there.”

For his part, Resort’s owner Morris Bailey welcomed Amaya’s recent $4.9 billion acquisition of the Rational Group, and said he was now optimistic its licensing application would move forward, stating:

“This is an exciting era of gaming in New Jersey and we are confident it will be another positive stepping stone in Resorts storied history.”

The power of PokerStars

PokerStars is the world’s biggest online poker room with an estimated $1.1 billion in annual revenue and $420 million in profits. Both PokerStars and Full Tilt have around 85 million registered players and a quick glance at tracking site PokerScout shows around 19,000 cash game players gambling on PokerStars at any one time.

Needless to say, the online giant is the best in the business for some very good reasons, including incredible software, professional marketing, and great organization of its poker tournaments in both the live and online arena. PokerStars entry into New Jersey could therefore see the return of some of its pre-Black Friday customers, as well as a legion of fans who up until now have been unimpressed by the brands already on offer in The Garden State.

PokerStars entry is thus likely to have a positive impact on state iGaming revenues, and in the long run further expansion of the brand stateside could even help restore the USA’s online poker industry to its former glory. In spite of its incredible potential, other iGaming operators have fought hard to have PokerStars blocked from the US market, but the disappointing results coming in since regulation was introduced in Nevada, Delaware and New Jersey has seen attitudes soften significantly. Although it may be true that PokerStars acceptance in New Jersey could see the Borgata’s Online operation slip from its top spot, but in the long run greater competition should help the industry as a whole, while PokerStars’ competitors will also have the opportunity to learn some new tricks from their chief rival.