New Jersey Collects Just $1.4m In Online Tax Revenues For February

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Thursday, March 13th, 2014 | Written by Stephen Smith

New Jersey’s 11 casinos posted a 6% decline in revenues to $199 million In February, compared with the $212 million they generated for the same month a year earlier. During the month, however, the state’s 16 online gambling sites were up by 9% to $10.3 million, which when added to the overall tally means New Jersey’s gambling revenues decline by a more modest 1.4% to $209.3 million.

Land Casinos in 7th Year of declining revenues

In January, The Atlantic Club casino closed offering the state’s other gambling venues the opportunity to divvy out its previous customers. Excluding online revenues, The Golden Nugget Atlantic City posted the highest monthly gain of 26% to $12.5 million, followed by the Revel Casino Hotel up 20.7% ($10.9 million) and the Tropicana Casino and Resort also up 20.7% ($19.7 million). Other risers included the Resorts Casino Hotel up 11% to $9.7 million, and Caesars Atlantic City up by 5.8% to $25.6 million.

On the other side of the coin, Trump Plaza Hotel and Casino was down by a huge 25% to $3.9 million, with the other Trump Entertainment Resorts casino, the Trump Taj Mahal, also down by 24% to $15.6 million. Also posting declines was The Showboat Casino Hotel down 16.5% to $12.2 million; Bally’s Atlantic City down 11.4% to $16.6 million; Harrah’s Resort Atlantic City down 5.5% to $26.3 million, and the Borgata Hotel Casino and Spa down 1.6% to $45.8 million.

Currently, New Jersey gambling is in its seventh consecutive year of declining revenues, and so far this year, Atlantic City’s land-based casinos have generated $385 million in revenues, down 7.7% from the same period in 2013.

Online gambling up 9% in February

In terms of online gambling, New Jersey‘s internet gambling market posted a 9% gain in February, with online casino revenues rising by 20% to $7.2 million, whilst poker could only report a 10% slide in growth to $3.1 million.

Continuing to dominate New Jersey nascent internet market, which began in late November, is Borgata Hotel Casino & Spa, with its partypoker brand, controlling 40% of the market worth $4,085,444 in February. Commenting on his companies impressive results, Boyd Gaming CEO Keith Smith, said:

“We were particularly encouraged by the performance of Borgata’s online casino site, which achieved month-over-month revenue growth of 36%, and more than 50% on a per-day basis..We are pleased with the progress we have made so far in New Jersey, and will carefully consider future online opportunities elsewhere to determine which ones make strategic sense for our Company.”

Next, Caesars Interactive (WSOP.com, 888 and Caesars properties) posted a 9% rise in revenues to $3,335,470, representing 32% of the NJ market; The Tropicana (Virgin) won $1,345,138 online, up 62% from the previous month and equivalent to a 13.1% market share; and the Golden Nugget was up by a huge 62% to $460,121.

However, reporting declines in online revenues for February was The Taj Mahal (Ultimate Casino) down by 32% to $587,323; and the Trump Plaza (Betfair) down 11% to $493,590. Commenting on Trump Entertainment Resorts’ poor online performance in February, Casino analyst Roger Gros from Global Gaming Business magazine, said:

“Frankly, the Trump properties just aren’t doing a good job right now. Ultimate and Befair were basically unknown in New Jersey and had their hands tied not being able to use the Trump name. Brands are very important in attracting players.”

Overall, New Jersey’s online gambling operations has generated $19.7 million in revenues, with around a quarter of a million online gambling accounts having been created since Internet betting was introduced on November 21st, 2013.

Online tax collections one tenth of estimates

When New Jersey was originally drumming up support for online gambling legislation, Governor Chris Christie (photo) pounced upon a Wells Fargo report which predicted around $1.1 billion in annual revenues, with $160 million then going into state coffers in the form of gaming taxes. However, for the first two months of this year online operations have generated $19.7 million in revenues, with February’s internet tax collection totaling $1.4 million, or approximately one tenth of initial projections. Consequently, earlier this month New Jersey was compelled to reduce its yearly tax collection projections to just $34 million.

New Jersey’s casino industry has been in steady decline since peaking at $5.2 billion in 2006, and 2013 saw the it’s gambling revenues fall below the $3 billion mark for the first time in 22 years. Online gambling was subsequently championed as a cure for the state’s ills but now rival politicians have jumped upon Gov. Christie original estimate, with State Senator Raymond Lesniak, commenting that “the governor just ignored those sensible economic thoughts. He totally threw them out the window.”

Nevertheless, New Jersey’s rollout has been slower than expected due to problems involving high “geolocation” rejection rates in rural areas located near the state border, as well as many big financial institutions still refusing to accept online gambling credit card transactions. Time should help the situation, although New Jersey will continue to face some challenging near-term hurdles as the novelty factor draws less attention from media, and the industry attempts to attract new players whilst retaining its existing ones.