Here’s How New Jersey’s iGaming Industry Can Hit $200 Million In Revenue In 2016

Posted on January 5, 2016

2016 could be a very big year for online gambling in the United States, and at the nexus of U.S. online gaming is New Jersey.

Considered a failed experiment just 12 months ago, on the back of 17 percent year-over-year growth, New Jersey shed that label in 2015, and is now poised to turn in an even better 2016.

If the New Jersey online gambling market continues to mature at its current pace, it will prove once and for all there is money to be made – by operators and by the state – through the legalization and regulation of online gambling, and could spur on legislatures in other states to pass bills legalizing online gaming.

2014’s disappointing results reset expectations

In 2014, New Jersey’s year-end gross gaming revenue tally was $123 million, a mere tenth of the revenue Governor Chris Christie projected the industry would generate, and 50 percent of what even the most conservative forecasters projected the state would generate in Year 1.

2014’s perceived failures are believed to have contributed to stalled progress in other states, as online gaming revenue in New Jersey (as well as Nevada and Delaware) was not the panacea they expected.

Still, 2014 did accomplish one thing: It grounded everyone, and reset expectations for online gambling in the United States. It also switched the focus from a potential revenue windfall to modest revenue expectations with the added bonus of implementing strong safeguards and consumer protections.

2015 marked by strong year-over-year growth

If 2014 hit the reset button, 2015 proved that the industry still had a lot of room to grow.

In 2015, New Jersey’s online gaming industry experienced solid growth each and every month, and did so despite a dramatic decline in online poker revenue, thanks to incredibly impressive gains on the online casino front.

Here is a look at the total online gaming revenue (online poker and online casino) year-over-year growth over the course of 2015:

  • January: +18%
  • February: +9%
  • March: +10%
  • April: +10%
  • May: +19%
  • June: +23%
  • July: +24%
  • August: +16%
  • September: +15%
  • October: +22%
  • November: +51%
  • December: not yet reported

When online poker revenue is removed, New Jersey’s online gaming growth is even more pronounced. Here is a look at the year-over-year growth of the state’s online casino revenue in 2015:

  • January: +35%
  • February: +14%
  • March: +21%
  • April: +18%
  • May: +29%
  • June: +32%
  • July: +34%
  • August: +23%
  • September: +24%
  • October: +32%
  • November: +64%
  • December: not yet reported

To further highlight the gains made on the online casino front in 2015: Total online casino revenue was $113 million over the first 11 months of 2015, compared to just $85 million over the first 11 months of 2014, putting the industry’s YoY growth at 25 percent.

Two reasons to expect more growth in 2016

Reason #1: NJ online casino revenue growth shows no signs of slowing down

There is no reason to believe the growth New Jersey’s online casinos experienced in 2015 won’t continue in 2016. In fact, October and November were among the best months in terms of year-over-year revenue growth, and were the first and third best months in the industry’s history.

With online casino growth expected to continue in 2016, here are three projections for online casino revenue in 2016:

  • 2016 online casino baseline projection of 25% growth: $155 million
  • 2016 online casino bearish projection of 10% growth: $137 million
  • 2016 online casino bullish projection of 30% growth: $162 million

Reason #2: PokerStars should bolster online poker revenue

In addition to continued growth on the online casino side, New Jersey could also see its online poker industry rejuvenated when PokerStars launches – something that is expected to occur in the first half of the year.

As noted in this column from October of 2015, the New Jersey online poker industry has been halved since hitting its high water mark back in January of 2014. If PokerStars can return the online poker industry to or near this level, or even a little beyond (between $3 million and $4 million per month), it would be a boon for the state’s coffers, and cause online poker growth to exceed that of the state’s online casinos.

When December’s revenue numbers are known, online poker will have brought in roughly $23 million over the course of 2015. If, with the help of PokerStars, the industry can bump its monthly average from just under $2 million to $3 million per month in 2016 (a reasonable estimate if PokerStars launches in H1) that number will jump to $36 million.

When added to the expected ranges for online casino revenue, the $36 million will put 2016’s total gross gaming revenue in the $175 million to $200 million range.

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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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