New Jersey is the focal point for gaming in the US. The market is evolving at a rapid pace. Atlantic City is moving away from being a market that is exclusively reliant on land-based casinos.
New Jersey is the epicenter of sports betting expansion — land-based and online — and it’s the gold standard for legal online gambling in the US.
How sports betting and online gambling intersect with Atlantic City’s turbulent land-based casino industry will keep analysts busy for decades to come.
January is a perfect example of the changing New Jersey gambling market.
January highlights the importance of online gambling
New Jersey generated $229.6 million in gambling revenue during the month of January.
That’s a near 25 percent year-over-year increase, and the state’s best performance in the historically slow month since 2012.
That’s a feat that’s made all the more impressive when you factor in Atlantic City boasted 12 casinos in January 2012, three more than its current stock of nine casinos.
But that doesn’t explain 2019 flirting with 2012 revenue numbers.
The explanation for that is simple: online gambling.
Online gambling is a major part of NJ’s gambling industry
More than 20 percent of the January 2019 tally ($49,123,665) was generated through online channels.
In fact, online has become such an integral part of New Jersey’s gambling industry that January 2019 would still have been the best since 2012 without the additional $15 million (compared to 2018) the two new casinos generated.
Think about that for a moment. Our hypothetical Atlantic City 2019, with seven land-based casinos, would generate a similar amount of revenue as Atlantic City in 2012 and 2013 when the market boasted 12 casinos.
And the reason is NJ online gambling.
NJ online gambling helped right the Atlantic City ship
A trip down memory lane is required to truly understand the importance of online gambling to Atlantic City casinos.
The year is 2013, and as the chart below shows, the Atlantic City market was decaying at a rapid clip.
In an attempt to turn things around, a bold idea was proposed (not for the first time): legalize online gambling.
Then-Gov. Chris Christie signed an online gambling bill into law in February 2013, with the state anticipating a launch before the end of the year. But there was and still is a lingering fear that the introduction of NJ online casinos would further cannibalize NJ land-based casino revenue.
Nothing could have been further from the truth.
By fall 2014, the oversaturated market had shed four casinos. All were struggling and in dire straits before the arrival of online gambling in November 2013.
It was quite telling that only one of the shuttered casinos was involved in online gambling: Trump Plaza. And Trump Plaza’s partner, Betfair NJ online casino, found a new home with Golden Nugget and is thriving today.
On the flipside, every casino that survived the 2014 purge was involved, or planning to be involved, in online gambling. A fifth casino, Trump Taj Mahal closed in 2016, and its online partner, Ultimate Gaming, closed up shop in New Jersey and Nevada in 2014.
Cannibalization? What cannibalization?
Once online gambling found its groove (in mid-2015), and the land-based industry stopped contracting, the effect of online gambling on the Atlantic City casino industry was hard to miss and indisputable.
It was a shot in the arm for an industry that desperately needed a shot in the arm.
The remaining casinos and the industry writ large haven’t seen land-based casino revenue decline since 2015. That’s three straight years of land-based growth alongside double-digit gains in NJ online casino revenue. Those gains are coupled with a massive increase in the number of online gambling operators in the Garden State.
If we extend the previous chart a few more years, the rebound, and the reason behind it, is easy to see.
The upshot for New Jersey in 2019
So, 2018 was the industry’s best year since 2012.
With a full year of NJ online sports betting to look forward to, 2019 revenue will likely eclipse $3 billion. Online could generate $650 million of that with $400 million coming from online casinos and poker, and another $250 million coming from online sports betting.
After the strong January numbers, the industry is well on its way to achieving those goals.