Will A Hard Rock-Branded Online Casino In New Jersey Flourish Or Flounder?

Avatar March 2, 2017 2441 Reads
Hard Rock AC online casino

As first reported by the Press of Atlantic City on Thursday morning, Atlantic City Mayor Don Guardian projects that the shuttered Trump Taj Mahal will reopen as the Hard Rock Hotel & Casino AC in summer 2018.

This follows earlier reporting that Taj owner Carl Icahn entered into an agreement with Hard Rock International to sell the decaying property. Today, Hard Rock announced the acquisition.

Hard Rock will invest $300 million into the purchase and renovations, creating an estimated 3,000 jobs.

Presumably, the new operator will also invest in a NJ online gambling license, as the format has proven a boon for AC casinos that have embraced it.

But can a site launched nearly five years after online gambling first went live in NJ really make a notable impact? Indicators point to yes.

Latecomers have gained significant market share

The NJ online poker and casino industries consisted of far fewer sites in November 2013, the month when the first wave of regulated sites went live. And all of them have performed admirably.

Pala Casino launched in November 2014. Despite being a relatively unknown quantity in New Jersey, the San Diego-based brand now accounts for a significant portion of Borgata AC online casino revenue.

How much? According to the latest US iGaming Tracker report from Eilers & Krejcik Gaming, the casino has captured 15 percent of Borgata’s online market share, which translates into roughly $5.6 million in revenue generated per year.

Upstart PlaySugarHouse — a brand based in Pennsylvania operated by Rush Street Interactive — has done one better. Having only launched in September, the operator already captured an estimated 10 percent of Golden Nugget’s industry-leading revenue. That’s a number which will almost undoubtedly grow as the site matures.

It wouldn’t surprise if SugarHouse brought in $6 million or more in 2017.

But the most notable late entry is not an individual site, but an entire license. Resorts AC, which launched its first site in February 2015 (Resorts Casino), and has since added Mohegan Sun Casino and PokerStars, grew at a torrid pace over its first 18 months.

As of January 2017, it accounts for a 13 percent online casino market share, and a 40 percent share of the NJ online poker industry. Assuming a 65 percent license share for online casino, Resorts Casino alone brought in $15 million in 2016.

Suffice it to say, with regard to the NJ online gambling industry, tardiness is a forgivable offense.

Hard Rock upside is even higher

A Hard Rock online casino would possess several critical advantages over the aforementioned latecomers:

  • It would presumably be an Atlantic City casino branded site. According to Eilers, sites adorned with the name of an AC casino account for the biggest chunk of license revenue, across all licenses.
  • Hard Rock has already established a strong presence in Atlantic City, where the Hard Rock Cafe has conducted business for some 20 years. The Cafe — which is located in the Taj Mahal — remained open after the casino shuttered its doors in October 2016.
  • Atlantic City is more a tourist spot than a grouping of locals casinos. This dynamic favors a well-known national brand like the Hard Rock, which operates 172 Hard Rock restaurants, 24 hotels and 11 casinos.
  • Hard Rock is tied to Maryland Live! and soon to be Pennsylvania casino operator the Cordish Company. Cordish already has business in Atlantic City (Atlantic City Outlets, The Walk) and runs two Hard Rock casinos in Florida. An alliance in NJ could strengthen Hard Rock’s marketing reach.

Given these variables, it wouldn’t surprise if Hard Rock surpassed even Resorts in its ability to drive online casino traffic.

But it’s not all roses

There are a couple factors that could work against the Hard Rock.

Currently, the industry is growing at roughly a 30 percent annual clip. But there’s no guarantee that the NJ online market won’t reach a stabilization point by mid-2018. Much of the industry’s recent growth looks to have been fueled by big strides in mobile technology and payment processing.

Those advances stand to be more incremental going forward. A stagnant industry has a lesser need for a new operator.

Hard Rock will also be hard-pressed to catch up on several fronts, particularly the game selection department.

One of the secrets of Resorts’ and PlaySugarHouse’s success were that they rapidly built up their game libraries. Hard Rock will presumably have to do the same. Only by that time, industry standards will be much higher, with 500 games presumably becoming the new benchmark.

Finally, Hard Rock is ill-advised to launch an online poker room, as even PokerStars has had a mostly cannibalistic impact on industry revenue. Lesser knowns would face an enormous uphill battle. That is presumably why Pala and Golden Nugget Casino have shelved their online poker plans.

Hard Rock could incur heavy losses if it goes the way of Taj Mahal’s previous partner Betfair. That company now runs a successful NJ online casino, but could never get its poker operator off the ground.

Bottom line for Hard Rock

Overall, the advantages of a Hard Rock online gambling rollout outweigh the negatives. That is, as long as the operator takes a proactive approach to building its business, and fades online poker.

Our estimates: It wouldn’t be out of the question for a singular Hard Rock online casino to pull in $20 to $25 million in annual revenue at maturity.

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