NJ Online Gambling Revenues Falls For First Time In April

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Thursday, May 15th, 2014 | Written by Stephen Smith

For the first time since New Jersey introduced online gambling six months ago, the state has reported a decline in its nascent igaming industry with April’s revenue tally of $11,428,737 down from the $11,878,374 generated in March. On a more positive note, however, when online gambling revenues were added to those collected by the state’s land-based casinos, overall gambling revenues were up 3.2% to $235.9 million in April, compared to the same month in 2013.

NJ land-based casinos in April

Atlantic City’s 11 brick-and-mortar casinos collected $224.4 million in April, which is 1.8% lower than the $228.5 million the state collected from its then 12 casinos back in April 2013. When the Atlantic Club casino that closed on January 13th 2014 is discounted, however, revenues were actually higher by 3.3%.

Breaking the figures down further, Revel Casino Hotel reported the biggest increase in revenues, up by 55% to $12.5 million from $8 million a year earlier. The Golden Nugget was the next biggest climber up by 40% to $13 million; followed by Caesars Atlantic City up 17% to $34 million; the Borgata up 12.8% to $49 million; Resorts Casino Hotel up 7.7% to $12.5 million; and the Tropicana up 6.4% to $21.9 million.

On the other side of the coin, Trump Plaza saw its revenues decline by 26% to $4.4 million in April; followed by the Showboat down 20% to $13.2 million; the Trump Taj Mahal down 18.8% to $17.6 million; Bally’s down 12.2% to $16.7 million; and Harrah’s down 10.4% to $24.9 million.

Caesars Entertainment owns four of Atlantic City’s 11 surviving casinos, namely Harrah’s, Bally’s, Showboat and Caesars, and commenting on the contraction of the state’s gambling market, Caesars Entertainment CEO Gary Loveman, said:

“All the businesses in A.C., are in tremendous pressure. When the Revel joined the market..it didn’t do anything to grow it, instead it just took a portion of the existing level of activity..So we’re looking at all of our options to continue to reduce the cost of doing business here, options to reduce capacity.”

Online gambling down $450k in March

According to the latest figures released by the New Jersey Division of Gaming Enforcement, internet gambling brought in $11,428,737 in April, down from the $11,878,374 taken in March. The figures break down approximately as $8.8 million for online casinos and $2.6 million for online poker. The result subsequently came as a huge disappointment for The Garden State, which had previously reported impressive increases for previous months, including 28% in January, 9% in February, and 15% in March.

Last month, online gambling market leader Borgata (bwin.party) reported a fall in revenues from $4.39 million in March to $4.11 million in April; and Caesars (888) saw revenues slip from $3.71 million to $3.05 million. Borgata and Caesars now account for 63% of NJ’s total online gambling market, down from 68% in March. The Golden Nugget also noted a 15% decline in revenues to $575k last month.

On the flipside, Tropicana (Virgin/Gamesys) saw its revenues improve by 10% to $2.15 million; Trump Plaza (Betfair) almost doubled its revenues to $926k; while the Trump Taj Mahal (Ultimate Gaming) remained fairly flat at $609k.

The overall result, however, is that New Jersey has now suffered its first ever decline in online gambling revenues, with the state subsequently collecting just $1.7 million in online tax revenues last month, a figure significantly below analyst predictions.

Online poker the culprit

While online casino games noted a slight uptick in revenues for April, online poker, which typically accounts for around 20% of the New Jersey’s regulated igaming market, shrank from $3.2 million in March to $2.6 million in April. Also troubling was the fact that although new online gambling accounts rose 10.6% in April to 322k, the rate of increase was still lower than the 18% gain reported in March, thus marking the third consecutive month of slowing growth.

As noted by Chris Grove at onlinepokerreport: “The upshot of that fact is that casinos who saw growth in April managed that growth primarily at the direct expense of their competitors as opposed to via an expansion of the market..That suggests New Jersey’s online casinos are a bit more adept at stealing traffic from one another than generating new customers at this point.”

The story so far

New Jersey’s 11 casinos and 16 online gambling sites have so far generated a combined $831 million in revenues for the first four months of this year, 6% lower compared with the same period in 2013.

From that total, The Borgata continues to lead New Jersey’s igaming market with $16.4 million in revenues over the past four months, followed by $13.1 million for Caesars Interactive and $6.2 million from the Tropicana Casino. The Golden Nugget and the Trump Plaza and Trump Taj Mahal each have generated between $2 million and $2.7 million over the same period.

While some naysayers have suggested that New Jersey’s latest online gambling results indicate the state’s nascent industry is already saturated, others have taken a more optimistic view of the future. A number of factors they believe will eventually give NJ’s online gambling figures a boost include improved geo-location and payment processing methods, as well as improving greater awareness of NJ’s online gambling industry.