Year 1 Analysis: PokerStars’ Impact On New Jersey Online Poker Positive But Modest

Posted on March 21, 2017
[toc]This week, PokerStars will celebrate its one-year anniversary in the New Jersey online gambling market.

It’s as good a time as any to take a look at how the company has fared and its overall impact on the state’s online poker market.

The (over) hyped return of PokerStars

While patiently waiting for PokerStars’ launch, many hoped that the clear-cut industry leader’s return was going to radically alter the state’s online poker landscape. Some expected PokerStars to usher in a new era of marketing and competition in what had become a stagnant market.

Unlike the consistent and sustained growth NJ online casinos have experienced, the state’s online poker industry peaked early. After taking a nose dive, the market eventually leveled off at about 60 percent of its high water mark.

As you can see in the chart below, online poker produced its best month in January 2014, generating $3.4 million in revenue in just its second full month. The industry launched in late November 2013.

But by June, the industry fell mightily. That summer, monthly online poker revenue was tallying just over $2 million and remained relatively stagnant for nearly two years.

The industry wouldn’t exceed $2.3 million in revenue until March 2016, which just so happened to coincide with the launch of PokerStars NJ.

The PokerStars bounce

This jump from PokerStars’ launch wasn’t surprising.

As noted, PokerStars was supposed to grow the overall market. With its arrival, online poker revenue in April and May exceeded $2.5 million industry-wide, and things were looking up.

However, the market growth was short-lived. Just a few months after PokerStars’ US poker return, the market settled back near its previous numbers (around $2 million monthly). Signs of the early “PokerStars bump” all but vanished.

Effect on 888 and PartyPoker

The market impact may have been slightly positive. But for the existing operators, the arrival of PokerStars was unpleasant. Most of PokerStars’ players were already active.

The newcomer quickly displaced these operators as the top earner. According to Robert DellaFave, 70 percent of PokerStars New Jersey players were cannibalized from the existing operators, 888/WSOP.com and PartyPoker/Borgata.

Interestingly, this cannibalization occurred in one fell swoop and lasted only a couple of months.

By June, PokerStars, PartyPoker, and 888 had settled into a relatively stable market share. 888 and PartyPoker each possessed approximately 30 percent market share, and PokerStars around 40 percent.

Borgata/PartyWSOP/888PokerStars

Mar 16 41.99% 33.73% 24.29%
Apr 16 28.82% 25.67% 45.51%
May 16 28.47% 26.73% 44.80%
Jun 16 29.91% 30.58% 39.51%
Jul 16 30.22% 32.30% 37.48%
Aug 16 28.01% 32.18% 39.80%
Sep 16 31.31% 31.80% 36.89%
Oct 16 30.72% 26.86% 42.42%
Nov 16 29.85% 30.35% 39.80%
Dec 16 29.76% 31.75% 38.49%
Jan 17 28.94% 30.50% 40.56%
Feb 17 28.34% 30.70% 40.96%

The only outlier months were September (where PokerStars lost ground to 888) and October 2016, when PokerStars NJ ran its NJCOOP online tournament series.

This also happened to be the industry’s best month since the early PokerStars’ bump in March, April, and May.

The revenue surges from major online tournament series is the biggest takeaway of 2016. PokerStars’ tournaments have proven popular, and my guess would be that all New Jersey operators start placing a greater emphasis on such series in 2017.

Upshot

Many hoped PokerStars would significantly impact the market. But this turned out not to be the case, as growth has been somewhat trivial.

This was probably an unrealistic expectation to begin with. The constraints of the New Jersey market proved too restrictive to overcome, even for PokerStars.

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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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