No Contest: A Comparison of Year 1 and Year 2 Of Regulated NJ Online Gambling

Posted on January 18, 2016 - Last Updated on January 17, 2016

New Jersey’s online gambling industry had a rough first year in 2014, highlighted by the disappointing revenues the industry generated. That narrative was flipped on its head in 2015, as the industry rebounded in a big way.

Here’s a comparison of year one and year two of New Jersey’s online gaming industry.

Revenue growth

After an underwhelming 2014, the New Jersey online gambling industry experienced 17 percent annual growth in year two, tallying $148.8 million in CY2015 compared to $122.8 million in CY2014. Growth aside, the industry did a complete 180 in 2015, erasing the pessimism of a disappointing year one, during which the industry generated about one-tenth of the state’s ludicrous estimates, and replacing it with optimism for future growth.

The industry not only saw strong annual growth, but monthly revenue also increased every single month compared to the previous year.

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From May through December growth was at least 15 percent each and every month, topping out with an astounding 52 percent YoY increase in November.

The overall trend line is growth dating back to December of 2014, straight through 2015, and culminating with November and December of 2015 being the two best months in the industry’s history.

Unsurprisingly, Q4 of 2015 was also the industry’s best quarter to date. A closer look at the revenue numbers on a quarterly basis demonstrates just how markedly different 2014 and 2015 were, as quarterly revenue decreased a total of 8 percent between Q1 and Q4 of 2014 (falling each quarter), but grew 13 percent from Q1 to Q4 of 2015, with quarterly growth in three of the four quarters in 2015.

  2014 Quarterly +/- 2015 YoY growth Quarterly +/-
Q1 $31,644,668 N/A $35,137,326 +10% +18%
Q2 $31,404,203 -1% $37,489,864 +16% +6%
Q3 $30,866,096 -2% $36,775,183 +16% -2%
Q4 $28,959,948 -6% $40,130,778 +28% +8%

You can see this divergence more clearly in the chart below:

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NJ online casino and iPoker revenue continues to diverge

One area of concern for the industry is online poker.

In January of 2014, online poker accounted for 36 percent of the industry’s monthly revenue. By April of 2014, that number had shrunk to just 22 percent, as both online poker revenue was on the decline and online casino was ticking upward.

By January of 2015, online poker revenue accounted for a mere 20 percent of total online gaming revenue, and by December 2015, just 14 percent of the state’s monthly online gaming revenue came from online poker.

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On the other hand, iCasino revenue has been steadily increasing (with a few blips here and there) since the industry launched. More importantly, there doesn’t seem to be an end to this growth, and there is no reason to believe the industry will hit a ceiling in the foreseeable future, as the growth (when viewed on a macro level) has been sustained and fairly linear.

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How NJ online poker could turn it around

There are potential solutions to the state’s online poker problems.

The first solution is the launch of PokerStars. The long-anticipated launch of the world’s leading online poker brand should create an initial surge in traffic much like the original launch of legal online gaming produced back in late 2013/early 2014.

However, this surge will likely be short-lived if the liquidity constraints that have hampered the online poker market in the Garden State aren’t fixed. And unfortunately, the only fix is to enter into interstate agreements, which seem unlikely in the current environment, where only sparsely populated Nevada and Delaware are potential interstate partners.

In all likelihood, the 2016 launch of PokerStars, with a corresponding traffic spike, will give the industry false hopes unless more states (most likely Pennsylvania) legalize online poker and enter into interstate agreements with New Jersey. But, even accepting an accelerated timeline for Pennsylvania, New Jersey’s online poker industry wouldn’t see the added liquidity until at least 2017.

Industry growth

Ending on a positive note, unlike Nevada, where a number of interested parties have put their online poker launches on hold, New Jersey still appears to be an appealing state for operators, evidenced by the launch of three new online casinos in an eight month span from November of 2014 to July of 2015. More importantly, unlike the crushing loss of Ultimate Gaming in 2014, no operators closed their doors in 2015.

Resorts launched two online casino brands; ResortsCasino.com launched in February and MoheganSunCasino.com launched in July, and Borgata added a third online casino skin in late 2014 with the addition of PalaCasino.com.

2016 will likely see even more online platforms pop up, most notably PokerStars.

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Steve Ruddock

Steve covers nearly every angle of online poker in his job as a full-time freelance poker writer. His primary focus is the developing legal and legislative picture for regulated US online poker and gambling.

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