Every month the New Jersey Division of Gaming Enforcement releases a breakdown of each casino’s online gaming revenue, and every month we report on these numbers, pointing out the good and the not-so-good of the New Jersey online gaming market.
But the numbers don’t tell the entire story – they seldom do. There is more going on than meets the eye in New Jersey, and in a vacuum the numbers don’t place the current trajectory of the industry in the proper context.
In this column, I’ll try to explain what the numbers don’t say, and offer some insights into what may appear to be inconsistencies, but are simply the realities facing New Jersey online casino operators.
The jackpot problem
One thing the gross gaming revenue figures don’t account for are the sizable jackpots the operators pay out from time to time.
There have only been several huge reported jackpots (most notably a $1.3 million slot jackpot at HarrahsCasino.com in November of 2014, and a $1.5 million Let It Ride payday at BetfairCasino.com in February of 2015), but you can be certain that other, lesser but still significant, jackpots are hit virtually every month.
In any given month, an operator’s slot hold can be decimated by one of these jackpots.
Consider for a moment that the top performing online casinos in New Jersey generate about $3 million per month in revenue. If a player hits a $300,000 jackpot, the casino’s hold immediately drops 10 percent for that month.
Jackpots are part of doing business – and are factored in to the casino’s average hold – but it’s important to understand why some casinos suddenly seem to have a bad month every now and then. The truth is, it’s rarely a bad month (although those do happen), and often a jackpot.
Anomalies in the monthly revenue reports, where a casino’s GGR suddenly dips by several hundred thousand dollars, are almost always indicative of six-figure jackpots being hit, particularly when the rest of the industry isn’t on the decline.
Unfortunately, when it comes to identifying these jackpots we are left guessing, as most players don’t want to announce their big scores (for obvious reasons) and don’t allow the online gaming sites operating in the state to publicize these big payouts.
Explaining Golden Nugget’s unpredictability
There is one exception to the jackpot anomaly, and that exception is the Golden Nugget, which on paper seems to be the most volatile online casino in the market, as its monthly GGR varies far more than its competitors.
In addition to jackpots, there is a reasonable explanation for this variance, and that reason is Betfair Casino, which operates under the Golden Nugget’s online gaming license.
Betfair was originally partnered with Trump Plaza, which proved problematic for several reasons.
First, the landmark Atlantic City casino was struggling mightily (evidenced by its closure in September of 2014) which made it hard for the brick and mortar casino to promote its new online casino.
Second, when online gaming launched in late 2013, two Atlantic City casinos may have borne the Trump name, but they were not owned by Donald Trump. This strange dynamic prevented the casinos from carrying over the Trump brand to their online casinos like their competitors did.
So, instead of a dual marketing threat like Borgata and party, or Caesars and 888, there was no TrumpPlazaCasino.com, and New Jersey players only found the relatively unknown brand of BetfairCasino.com – the same dynamic likely stymied Ultimate Gaming in New Jersey, as it couldn’t leverage the Trump Taj Mahal brand and had to rely on Ultimate Poker and Ultimate Casino exclusively.
Despite this handicap, Betfair managed to grab a solid market share.
According to several people I’ve spoken with, the company did this by focusing on high-volume players very early on – a smart decision considering the other non-Atlantic City brands have all struggled compared to the known land-based iCasino brands.
The good news is that these players play a lot, and it doesn’t take many of them to reach seven-figures in monthly revenue. The bad news is that if a few of these “whales” don’t put in their usual volume over the course of a given month, BetFair’s GGR is going to nosedive, which seems to be reflected in the company’s revenue reports. These are combined with Golden Nugget’s and vary month-to-month.