A Strong Performance By NJ Online Casinos In April Offset By Poker’s Continued Woes

The two facets of New Jersey‘s online gambling industry continued to move along divergent paths in April, with casinos boasting strong annual growth and poker falling below the $2 million benchmark for the first time since November.

Perhaps the most startling takeaway from last month’s revenue tallies is that NJ online casinos now account for over 84% of the industry’s total iGaming revenue, whereas in the market’s infancy, poker could be counted on to pick up at least a quarter of the tab.

This unbalanced and growing disparity dampens what was otherwise a big month for the industry; one that saw it post its second-highest revenue totals to date.

NJ online poker revenue by the numbers

Based on revenue figures gathered from the New Jersey Division of Gaming Enforcement on Wednesday, New Jersey’s two remaining poker networks, Party/Borgata and WSOP/888 combined to generate $1,985,289.

• Monthly revenues were down a hair under 11%, and daily averages slipped 8%. That’s significantly less than the 19% drop witnessed from March to April of 2014, when the novelty of the market was just wearing off.
• In April 2014, NJ poker rooms won $2,591,839, which at the time represented their lowest total to date. This month’s tallies represent a 23% year-over-year drop.

• The partnership of PartyPoker and the Borgata accounted for 57% ($1.13 mm) of iPoker revenue in April, up from 55% in March. There hasn’t been a single full month since online poker went live in New Jersey that Caesars has been able to trump its competitor, despite coming close on multiple occasions.
• However, WSOP/888 won the war for cash game liquidity, and by a rather significant margin. According to PokerScout.com, WSOP/888 averaged 178 players and Party/Borgata 122.

The latter point is worth further consideration.

WSOP/888 only shares partial liquidity – at higher stakes ($.50/$1.00 and above) the two poker rooms operate independently. Not coincidentally, the network’s lower stakes games run with far greater frequency than either room’s mid-to-high stakes offerings.

Party/Borgata, on the other hand, shares cash game players across all stakes and tends to attract higher stakes players, resulting in more rake generated per hand. Combine this with the fact that the network runs a greater number of nightly tournaments, and the disconnect between cash game traffic and revenue starts to make a bit more sense.

NJ poker revenue comparisons do not tell entire story

On their own the monthly and yearly revenue comparisons weave a tale of an industry mired in a prolonged downturn. But there are other considerations that soften the magnitude of the industry’s struggles:

• The online poker industry as a whole is struggling mightily. Data collected from PokerIndustryPro.com via PokerScout shows that cash game liquidity has plummeted 18% since this time last year, and continues to trend downward at an alarming pace.
• New Jersey online poker traffic didn’t completely stabilize until May 2014. Yes, traffic fell off drastically in April 2014, but for at least part of the month, traffic averages, and subsequently daily revenue figures, were inflated due to the waning, but not completely dead, novelty effect.
• Marketing and promotions costs were presumably much higher in Q1 – Q2 2014 than they are now. So while operators are generating less gross revenue, their bottom lines should be/are much improved.

The latter two points suggest that the first unbiased point of annual comparison won’t present itself until next month, and maybe even as far out as July. Even then, all comparisons should be made within the context of global market performance.

Month-over-month comparisons too, are biased, as they do not account for the seasonal tendencies of the industry.

One additional point worth mentioning is that the number of NJ online casino sites has grown since April 2014, while the prevalence of poker sites has moved in the opposite direction.

Granted, new casino offerings from Resorts and Pala aren’t generating a huge percentage of total gaming revenue, but their contribution is large enough to partially explain the widening gap between poker and casino.

Outlook for NJ online poker in May

Last year, iPoker revenue tumbled 12% from April and May. While I don’t expect the same kind of falloff this year, a very small drop seems pretty likely, for the following:

• Seasonal downtrend: Online poker traffic typically doesn’t bottom out until June, but the downtrend begins to slow in May. There’s little reason to believe this year will be an anomaly.
• New Jersey traffic: Then again, traffic in New Jersey is up 1% thus far in May.
• WSOP: Come late-May, New Jersey’s serious grinders will be packing their bags and heading to Vegas in droves, probably in greater frequency then in recent years. This is because the Colossus tournament, beneficial rule changes and the influx of online satellites afford plenty of appeal to players on a restricted budget. Fewer players equates to lower revenue.

Then again, it’s conceivable that the live Series will prove a boon for online poker in May, as players scramble to secure their WSOP seats.

In either case, the Series will almost definitely have a negative impact on NJ poker revenues in June and July, but a largely positive one for WSOP NV and the three Delaware poker sites that it shares liquidity with.