Online Gambling Providing a Boost to NJ Casinos

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Friday, June 30th, 2017 | Written by Shane Larson

Over the past couple of years, casinos based in New Jersey have steadily been losing money, just like many of their customers. That said, the popularity of these casinos’ online operations has reversed some of their revenues decline over the last six months, much to the relief of state coffers and casino owners, alike.

Attracting Millennials

New Jersey is currently one out of only three states in the US, together with Delaware and Nevada, where state residents and visitors are able to log on to websites operated by casinos and gamble from the comfort of their own homes, as opposed to heading down to a land-based casino to play in a loud and sometimes overwhelming environment. According to gambling experts, those casinos sponsoring their own online operations are therefore clearing a path for millennials to get involved in the industry, as this age group generally tend to prefer the online arena for gambling. With this in mind, land-based casinos are having to adapt their strategies to attract this new generation of customer, and currently in the US at least eight different states are considering legalizing online wagering by casino-run sites , including Pennsylvania, New York, Michigan, New Hampshire, California, Hawaii, New York, Illinois and West Virginia.

Regulated Market Benefits

Casino sponsored, state-sanctioned gambling online is much different from the online gambling that takes place on offshore sites, which are beyond the reach of state taxes. Similarly, regulated daily fantasy sports operations, such as the popular sites DraftKings or FanDuel, are able to generate many additional fees and taxes that ultimately benefit legalized markets.

Back to the Garden State, the NJ Division of Gaming Enforcement has reported that the total amount of gambling revenue in 2017 through to April has reached $763.5 million. This is a 1.7% increase when compared to the same period of time a year earlier. From that tally, online gambling accounted for around $80.1 million, which means that online revenues is currently higher by a massive 29.5 percent since the same time period in 2016.

Significant Growth

New Jersey legalized online gambling back in 2013, but it has taken these casinos a while to make the necessary software to allow them to take full advantage of the new law, and it has also taken just as long for gamblers to change with the times. In the beginning, for instance, some casinos only offered one or two online games, but online gambling has since grown bigger at the end of 2016, and the beginning of 2017, which has resulted in a dramatic increase in revenue. In April, the state subsequently earned $3.1 million in online gambling taxes, which was up 23 percent from the $2.5 million taken in the same month last year.

Nevertheless, the National Conference of State Legislatures has also pointed out that while the income being generated from casino sponsored online gaming sites has been good, it has not lived up to original optimistic predictions pre-regualtion. For instance, in New Jersey, the online gambling industry was forecast to generate $1.2 billion in its first year, resulting in taxes of $180 million for the state.

Online Poker Suffering

While New Jersey’s online casino games have been experiencing exponential growth over the past year or so, the same cannot be said for online poker which has recently seen a drop off in its traffic. In fact, the market has declined by 23% since March of this year, and although summer is traditionally a slow time of year for the industry, that figure is 15% below the global liquidity figure for the same three months.

Consequently, PokerStars has seen its overall traffic drop off by 21.3% over a three month period, although it still commands a 40.3% of the state’s poker market. However, traffic in New Jersey is also down by 28% over the past three years, which is quite concerning as PokerStars entered the New Jersey market last year, but has apparently still failed to stem a fall in its overall traffic.