2014 is officially in the books, and the final numbers from the New Jersey Division of Gaming Enforcement have been released, and the takeaways can best be described as varied during the first full year of New Jersey’s online gambling industry.
In 2014 New Jersey iGaming operators tallied a total of $123,061,981 in Gross Gaming Revenue, well below the conservative estimates offered up by Econsult ($210 million) and GamblingCompliance ($261 million), and a mere 1/10th of what New Jersey itself predicted based off Wells Fargo lofty (and by all accounts irrational) expectations.
Because of these estimates (particularly New Jersey’s and Wells Fargo’s) Year 1 of iGaming in New Jersey will certainly go down as a major disappointment, but it shouldn’t.
The state not only pocketed millions of dollars in licensing fees in 2013 and 2014, it also pocketed $18,464,535 in tax revenue from New Jersey’s $123 million in GGR over the course of 2014.
Furthermore, hundreds if not thousands of jobs were created because of online gambling; online winnings (such as the $1.3 million jackpot hit by Cathy Ruela in November) are now taxed; and marketing dollars flowed into the state as the casinos and online operators blitzed the state with print, radio, TV, and online ads.
Online gambling isn’t going to cure any budget deficits, but $20 million is still $20 million, and New Jersey directly received over $20 million in 2014 thanks to iGaming – not to mention millions more in ancillary revenue.
Online poker revenue was a major disappointment
Online poker got off to a fast start in New Jersey but petered out just as fast.
January, February, and March saw online poker revenue of over $3 million per month, before falling as low as $1.88 million by the time November rolled around – December saw a nice rebound back over $2 million.
All told, New Jersey online poker operators generated $29,064,097 in 2014, an average of just over $2.4 million a month.
If this wasn’t enough cause for concern, consider the state hasn’t reached $2.4 million in monthly online poker revenue since April; a clear sign that this downward trend is not an outlier, pointing to the fact that the industry is still regressing. Player acquisition is proving more difficult, and likely very costly, which has led to the operators being unable to keep up with the high rate of attrition in modern online poker.
New Jersey online operators need to solve this downward trend in 2015 or it will only snowball.
Online gaming revenue trending upwards
With online poker struggling New Jersey’s online operators are lucky to have online casinos to fall back on. Poker may get the bulk of the headlines (thanks to a robust online poker media), but in 2014 online casino revenue totaled $93,812,655, over three-times as much as online poker.
Online casino revenue tracked much closer to expectation as well, avoiding the sustained decline that online poker had to deal with.
iCasino revenue started off much slower, generating $6 million in January and $7.2 million in February (comparatively iPoker had already peaked at this point) before peaking at $8.8 million in April.
Additionally, iCasino revenue hit $8.6 million in revenue in December, flirting with its best month to date. So, while iPoker revenue ended the year down some 60% from peak, iCasino revenue was able to hold the line.
The ability of online casinos to maintain their revenue can be best illustrated by comparing peak revenue to average monthly revenue.
Here are the numbers for online poker:
- Online Poker Peak Revenue: $3.4 million
- Online Poker Average Monthly Revenue in 2014: $2.4 million
- Percentage Changed: 30%
And here are the numbers for online casinos:
- Online Casino Peak Revenue: $8.8 million
- Online Casino Average Monthly Revenue in 2014: $7.8 million
- Percentage Changed: 11%
Yes, Year 1 of online gambling was a disappointment, but when you promise the moon you should expect disappointment. If we disavow the early revenue reports, Year 1 of online gambling in New Jersey starts to look a whole lot better.