Regulated Pennsylvania iGaming To Outshine New Jersey Market

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Monday, July 27th, 2015 | Written by Charles Washington

In 1988, just Nevada and New Jersey offered casino gambling in the US, but today that number has risen to 43, or 86% of all the states in the country. Pennsylvania is one of them, and in 2007 the state opened seven casinos which brought in $1.4 billion during their fiscal year of operations, and by 2012 the $3.14 billion generated from casinos was enough to overtake New Jersey as the country’s second biggest gambling market. Similarly, in 2013 the US had three states offering online gambling, namely Nevada, Delaware, and New Jersey, and while that figure has remained the same until now, Pennsylvania may become one of the next states to join the drive towards online gaming expansion, with some analysts predicting that once again the Keystone State will out perform its eastern neighbor.

Pa. Population 30% Bigger Than NJ

In 2014, New Jersey generated $123 million in gross gaming revenues (GGR), and this year is on target to see a slight increase to $145 million. Pennsylvania, on the other hand, is hoping to improve on those numbers with some industry experts forecasting $165 million in revenues during Year 1, and an upper ceiling as high as $250 million. One factor contributing to Pennsylvania’s relative advantage is the size of its population, which at 12.8 million people is 30% bigger compared to that of New Jersey (8.9 million).

Population Tourism

However, matters don’t end there as border populations contribute significantly to player traffic, and while someone has to be in New Jersey to gamble online, they are not required to reside within the state. In 2014, for instance, 15% of PartyPoker NJ’s online players visited from near-by states for “poker tourism”, including New Yorkers which make up 4.4% of the site’s internet sign-ups, followed by Pennsylvania (2.7%), with the remaining out-of-state players subsequently hailing from all around the country, including California, Florida, Texas and Connecticut.

While New Jersey is bordered by Pennsylvania, New York, and the already regulated state of Delaware, its neighbor Pennsylvania, on the other hand, borders the very same states as New Jersey, plus the other potential markets of Ohio, Maryland and West Virginia. Therefore, Pennsylvania should have even more success in attracting out-of-state players to its online gambling sites, including customers coming from all over the Middle Atlantic states, and maybe as far as Washington DC and Baltimore.

Industry-wide Improvements Transferable To Pa.

Pennsylvania is well placed to benefit greatly from the hard-earned lessons learned by New Jersey after it first launched its online gambling industry back in 2013, including geolocation, payment processing, and player verification issues. Since then many technical and regulatory improvements have been made to more closely reflect the realities of the industry, one example being regulators giving geolocation service providers and operators more leeway as far as geolocation requirements are concerned. The same applies to verification policies, with players now required to provide just the last four digits of their Social Security number, which is less intrusive than asking for their full number.

Equally as important are the improvements made to payment processing transactions, which in the early days had a percentage approval rate in single digits and created a great deal of bad publicity that was ultimately responsible for putting off many players from opening up accounts. That rate has now increased to more than 50%, representing yet another area where Pennsylvania stands to benefit from advancements made recently in the iGaming industry.

Improved Software

New Jersey’s first regulated online gambling sites launched with a much more stripped-down version of the software they currently use in order to more easily iron out any potential glitches they may have subsequently experienced. Since then, New Jerey sites have undergone several software upgrades and now encounter less problems than their earlier versions, providing Pennsylvania with the opportunity to subsequently launch with significantly superior platforms than its neighboring state, and leapfrog many of the problems and challenges it originally faced.

Finally, New Jersey went through an arduous process of first launching its mobile platforms with iOS systems (Dec 2013), then an Android app (Feb 2014), before partypoker/Borgata launched an app in January this year which supported multi-table tournaments. Taking into account the current proliferation of smartphones and the expected growth in the mobile iGaming industry, Pennsylvania being able to offer an early rollout of such platforms should provide a considerable boost to the state’s online gambling revenue figures.