After 2 Years The Legal NJ Online Gambling Industry Continues To Deal Out Surprises

Posted By Steve Ruddock on November 24, 2015 - Last Updated on February 8, 2021

After two years, there are plenty of takeaways and lessons to be learned from New Jersey’s legal online gambling industry. The industry has struggled and excelled, and offered reasons for optimism and pessimism. There have also been a number of surprises during the industry’s first 24 months, both good and bad.  

Here are six of those surprises.

Online poker’s precipitous fall

New Jersey’s online poker industry came out of the gate running, with online poker revenue hitting $3.4 million by January of 2014, just its second full month of operation.

Analysts were excited, and there was plenty of optimism about the amount of revenue the state could bring in when the market eventually matured. If online poker grew at even a very modest pace, we’d be talking about New Jersey’s iGaming industry posting $15 million months and pushing $200 million in yearly revenue by the end of 2014.

What no one expected was for January of 2014 to be the high water mark for the state’s online poker industry. The novelty and rush to the tables by throngs of nostalgic players produced an early spike, but New Jersey’s lack of liquidity – the state has a population of nine million – eventually caught up to it. Since then, the state’s online poker revenue has receded to nearly half of its January 2014 tally, and the focus has shifted almost entirely to the casino side of iGaming, with online poker turning into an afterthought.

Online poker has been such a disappointment in the Garden State that even though two of the original four operators have shuttered their iPoker doors (Ultimate Poker and Betfair Poker), no one seems even remotely interested in filling the void and launching an online poker platform. There’s simply no money in it.

It seems like operators can’t launch online casino platforms fast enough, but when it comes to iPoker they have essentially ceded New Jersey to Caesars/888, Borgata/partypoker, and the soon to be launched Resorts/PokerStars combinations.

No interstate agreement

Because of the state’s iPoker woes, it’s also somewhat surprising there hasn’t been more of a push to partner with Nevada and Delaware to boost liquidity. The shot in the arm wouldn’t be a game changer for New Jersey, but the added traffic, particularly with Nevada being in a different time zone, wouldn’t be negligible either.

With PokerStars’ launch on the horizon, and perhaps Pennsylvania passing an online gambling bill of its own, there could be a renewed interest in interstate agreements.

And still no PokerStars

In December of 2013, PokerStars’ license application was put on hold by the New Jersey Division of Gaming Enforcement for a period of up to two years.

However, when the company was sold to Amaya Gaming in June of 2014, the DGE decided to reopen the company’s license application, and many people felt a launch would happen before the end of 2014. There were multiple rumors in the fall of 2014 predicting an imminent launch of PokerStars in New Jersey; obviously these rumors never materialized.

Even though we know PokerStars will launch, as we approach the end of 2015, it’s still unclear when PokerStars will launch, even though it was approved for a transactional waiver by the DGE on September 30, 2015. The latest reports put this sometime in H1 of 2016.

Most residents still don’t know NJ online casinos are legal

There are a lot of hard to believe statistics in the gaming world, but one of the harder to believe statistics is the number of residents that are still unaware online gambling in New Jersey is legal. Operators have described the situation on the ground through phrases like “very low” awareness, and “absolutely shocked.” Polls and research that have been produced usually put consumer awareness of legal online gambling between 40 and 50 percent.

The hope is the PokerStars brand will draw more people in and help usher in a new round of marketing that will raise consumer awareness.

Regulatory success

Enough of the bad, let’s move on to the good.

The industry’s regulatory success is perhaps the biggest, and most pleasant surprise thus far. Since launching two years ago, there hasn’t been a single documented case of underage gamblers, problem gamblers, or out of state players gaining access to New Jersey’s online gambling sites.

It would be foolish to think this absence of evidence means it hasn’t happened, but the absence of evidence is an indication that if it is happening, it’s on a very macro level, well below the rates of underage and problem gamblers gaining access to brick and mortar casinos. It’s also a clear indication that, despite what the fearmongerers might say, restricting underage, problem, or out of state access are not beyond the means of online gaming operators, and are issues that current technology can handle quite well.

I don’t think anyone expected the safeguards to be this robust or to work so well right out of the gate. Kudos to the New Jersey DGE, GeoComply, CAMS, and the rest of the people and companies involved. They’ve made New Jersey’s online gambling industry a rousing success and put to bed the hypothetical doomsday scenarios espoused by some online gambling naysayers.

Only one operator has shut down

Despite the industry’s early struggles, only a single operator has shuttered its online gaming sites in New Jersey, Ultimate Gaming. It should be noted that Betfair closed its struggling online poker room but continues to run a successful online casino.

In fact, as I noted above, it feels like operators can’t wait to launch more online casinos. The industry may have lost Betfair’s online poker room, and Ultimate’s casino and poker room, but they have gained PalaCasino.com, ResortsCasino.com, and MoheganSunCasino.com, with PokerStars’ online poker site waiting in the wings.

If anyone had put forth the claim in 2013 that the New Jersey online gaming industry would be just half to a tenth of the size it was projected to be, and the number of operators and platforms would increase, you’d think they were mad. But this is precisely what has occurred.

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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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