NJ’s Online Casino Market Has Returned Uninterrupted Growth Since 2013

Launched in November 2013, New Jersey’s online casino market has produced uninterrupted year-on-year growth each month over the ensuing five years. This startling statistic has surprised even some of the industry’s top experts, including PlayNJ.com lead analyst Steve Ruddock, who recently commented:

“I’m surprised that it’s still growing at such a rate. People expected full maturity at maybe the three- or four-year mark.”

While Ruddock believes online gambling has been beneficial for Atlantic City’s overall casino industry, others are not so convinced. According to some, online casinos have instead eroded part of their land-based revenue stream.

NJ’s Booming Online Casino Market

The New Jersey’s online casino and poker markets couldn’t be more diametrically opposed. On the one hand, online poker generated $29 million in revenue during its first full year of operation, a figure that still marks its annual high point. Since then, its revenues have been yo-yoing, falling to $23.8 million in 2015, and rising to $26.5 million in 2016, before dropping once more to $24.25 million in 2017.

Online poker has subsequently seen its share of New Jersey’s overall online gambling market shrink from 25% in 2014 to just 7.5% this year, giving up massive ground to online casinos.

Meanwhile, the Garden State’s online casino vertical is on a five year long winning streak, and hasn’t seen its position falter even once on a monthly basis. Over that time, the segment has generated a total of $938.4 million in revenue, and more recently its revenue tally has reached around $25 million per month.

Cannibalization of Casino Revenues?

New Jersey’s casino market was badly affected by the economic downturn of 2007–2008, and between 2014-2016 five of its casinos shut, including The Trump Taj Mahal, the Trump Plaza, the Revel, the Showboat Casino, and the Atlantic Club Casino Hotel. Even the financial crisis failed to take the shine off New Jersey’s online gambling market, which continued to grow at a massive 62.5% over the aforementioned period.

Not everyone see online casinos as a net positive for Atlantic City’s casino industry, though. According to some, the sector has instead cannibalized business from the land-based casinos’ other operations, and harmed the tourist destination’s gaming and non-gaming revenues. One of these detractors is Steven Norton, a former casino executive in Atlantic City, who at first supported legalized online casinos in New Jersey but has since changed his view.

“The likelihood of online gaming reducing attendance at our casinos and racetracks means operational downsizing, which leads to job and tax losses, reduced company earnings and dividends, and the likelihood of more bankruptcies. Not a pretty picture for a once-healthy industry,” commented Norton.

Are Online Casinos a Vicious Circle?

Adding some credence to his assertion is the fact September’s total gaming revenue saw six of Atlantic City’s nine properties suffer year-on-year revenue losses. The opening of two new integrated casino resorts in Atlantic City this summer (Ocean Resort Casino, Hard Rock Hotel & Casino) has to be partly responsible for the situation.

Nevertheless, Wayne Schaffel, another former Atlantic City casino executive, recently expressed a rather drastic view of the situation, asserting that online casinos have created a viscous circle that cannot easily be remedied. As he explained to the Press of Atlantic City:

“As these revenue figures continue to drop, states will become ever more desperate to recoup the lost tax revenue and will seek to expand online gaming, sports betting, mobile betting and more. This will further undermine brick-and-mortar casinos, leading to a spate of closures over the next decade. This will be especially dire for New Jersey, which, in my opinion, has no real way to ever recoup the shortfall.”

Overstating the Facts

Fortunately, the hype may not quite match the reality. The Golden Nugget Atlantic City, for instance, has earned $228 million in online revenue to date, with its senior VP Thomas Winter hailing this much-needed revenue stream, and holding the vertical up as a valuable tool in increasing brand awareness and drawing in a younger demographic.

Similarly, David Rebuck, Director of the New Jersey Division of Gaming Enforcement, says he is looking forward to continued growth in New Jersey’s online gambling market, commenting:

“It’s a growing industry. I thought we would have peaked by now, and (October revenue) numbers are coming out in a week and it’s going to be another good month for internet gaming.”