[toc]The New Jersey online gambling industry got off to an inauspicious start following its launch in late November 2013.
Plagued by technical, regulatory, and payment processing issues, it took quite a while for the industry to find its sea legs. 2014 was a disappointing first year thanks to these issues and the early unattainable revenue projections with which the industry was saddled.
New Jersey online gaming operators tallied just $123 million in the industry’s first full year, about one-tenth of the expected revenue New Jersey Governor Chris Christie predicted. Christie’s outrageous projections aside, this was still less than half of the more realistic estimates.
However, once the calendar flipped to 2015, it was a completely different story. The industry grew by leaps and bounds in 2015, and is growing at an even more accelerated rate in 2016. In 2015, the industry’s gross gaming revenue rose to $149,029,795, an increase of 17 percent, and it’s on pace to blow that number out of the water this year.
Monthly year-over-year revenue is up 25 percent thus far in 2016, and if this trend continues, New Jersey will end 2016 with a total tally of around $186 million in gross gaming revenue.
There is also a very good chance that by the time we hit December, this number could be even higher – maybe as high as $200 million.
The path to $200 million
There’s not a lot of history to go on, but in 2015, October, November, and December saw NJ online gambling revenue jump 22 percent, 51 percent, and 31 percent respectively.
Overall growth during Q4 2015 was 28 percent, well above the 14 percent YoY gains the industry saw during the first three quarters of 2015 following 10 percent growth in Q1, 10 percent growth in Q2, and 16 percent growth in Q3.
And this growth trend doesn’t appear to be an aberration. Q4 2015 seems to have been more of a jumping-off point for the industry, not a peak.
After seven quarters of up and down revenue numbers, New Jersey’s online gaming industry has seen revenue rise in each of the last three quarters, beginning in Q4 2015:
- Q3 2015: $36,775,183
- Q4 2015: $40,130,778
- Q1 2016: $44,887,151
- Q2 2016: $49,929,084
That being said, because the jump was so large in 2015 (14 percent more than the average YoY gains in Q1-Q3), I don’t expect Q4 2016 to be as pronounced. A similar jump would see Q4 growth reach nearly 40 percent based on the current 2016 growth rate.
Another factor that may stunt growth in Q4 this year is that the Q4 2015 YoY growth got a boost thanks to a $1.5 million jackpot hit in November 2014. When we account for the jackpot, YoY growth in Q4 2015 dips three percent, to 11 percent.
Still, an additional five percent boost above and beyond the current 25 percent growth rate is within the realm of possibility for Q4.
If the industry can sustain its current rate of 25 percent growth in Q3 (which seems likely considering July revenue was up 39 percent) and hit 30 percent in Q4, this would put New Jersey’s total online gross gaming revenue at around $193 million for the year.
This is well within striking distance of $200 million, which suddenly becomes an achievable number if a few things break the industry’s way — continued improvements on the payment processing front, new products such as virtual sports launching, or the continued proliferation of live dealer games.
Two hundred million certainly seems like a lofty goal, but it doesn’t require a lot of if’s, particularly when we look at the YoY growth over the course of 2016 thus far. In fact, it appears the industry is continually getting stronger, and is showing no signs of slowing down anytime soon — although there is certainly a ceiling somewhere on the horizon.
Not only is the industry growing year-over-year, but the percentage of growth is markedly higher than it was in 2014:
And if we break it down by quarterly growth, $200 million seems even more attainable.
Here’s what it would take to get close to $200 million in New Jersey online casino revenue:
|2014||2015||YoY growth||2016||YoY growth|
|Q3||$30,866,096||$36,775,183||+16%||$45,968,978 (est.)||25% est.|
|Q4||$28,959,948||$40,130,778||+28%||$52,170,011 (est.)||30% est.|
|Total||$123 million||$149 million||$193 million|
The industry’s current sustained growth, coupled with the ballooning growth we saw at the tail-end of 2015, puts gross gaming revenue of $200 million in 2016 within reach.