New Study Puts To Bed Notion That NJ Online Gambling Is Anything But A Win

Avatar June 22, 2017
NJ online gambling success

New Jersey online gambling has been an economic boon for both casino operators and the state, all while providing a safe haven for players.

That’s the key takeaway from a study from iDEA. The i-Development and Economic Association is a first of its kind trade association representing the interests of the US online gaming industry.

NJ online gambling comes up roses

Alan Meister, Ph.D of Nathan Associates and Gene Johnson of Victor-Strategies authored the study. They state that New Jersey online gambling has been a three-pronged win.

Benefits for Atlantic City operators

Online gambling has prompted a revival of sorts in Atlantic City. The resort town had been in the midst of a violent and multi-year downswing from 2006 through 2013.

After helping to stabilize the fledgling land-based industry in 2014 and 2015, online gambling helped AC turn the corner in 2016. That year, Atlantic City “saw a 0.4% increase in net gaming revenue, the first such increase since 2006. Concurrently, iGaming revenue increased 38%.”

This turnaround was in spite of four casino closures in 2014, and another (Trump Taj Mahal) in late 2016.

And it looks that in the future, online gambling will become an even more critical component of the boardwalk city’s reboot.

Online gambling accounted for 8.9 percent of land-based net gaming revenue in 2016. The study projects that figure will swell to 10 percent this year. So far in 2017, NJ online casinos have generated more revenue than three out of the state’s remaining seven land-based casinos.

Of course all of these glowing statistics would be for naught if anyone could prove that AC’s revival would have been even faster without online gambling. But that is simply not the case.

The study cites multiple “academic studies on the subject of cannibalization” that conclude online gambling has a complementary impact on land-based gaming. That allows casinos to effectively “engage new customers in innovative ways across multiple channels that will collectively grow future revenues.”

Supporting evidence from land-based operators is also cited, including one account from Caesars Interactive Entertainment that said “80% of its online registrants are new players…and another 8% are inactive players at one of the company’s three Atlantic City casinos.”

Benefits for the state

For all the good online gambling has done for Atlantic City, it’s only a microcosm for what it’s accomplished for the state of New Jersey.

  • Taxes. Online gambling generated $34.5 million for New Jersey in 2016. The study projects that figure to rise to $40.3 million in 2017. All this, without placing any burden on state taxpayers.
  • Jobs. The state has seen the equivalent of 3,374 full-time jobs added since NJ online gambling went live in late 2013.
  • Wages paid. $218.9 million went to employees as a direct or indirect result of the NJ online gambling industry.
  • Economic output. The direct economic and fiscal impact of investment in and operation of online gambling in NJ from 2013 to 2016 was $522.3 million. The indirect impact was $315.4 million, and the induced $160.6 million.

Other states currently weighing the merits of online gambling legislation can replicate this success. Particularly:

Benefits for players

Typically, one does not associate online gambling with something that benefits the people who partake in it. But the study shows that the climate for gambling in New Jersey is in a much healthier and safer place than it was before the legal industry opened its doors.

According to the study, the benefits of state regulation for players include:

  • Fraud and cheating protection. Via “stringent identity verification, account funding protocols, and comprehensive recording of all gaming transactions,” New Jersey regulators are able to stay on top of instances of fraud and cheating.
  • The discouragement of money laundering. New Jersey’s know-your-customer protocols are both strict and comprehensive, and cover tracking of account funding and other iGaming transactions. They discourage money-laundering activities.
  • Prevent underage gambling. Thanks once again to the “strict KYC registration procedures and constant monitoring,” operators have been effective at preventing underage gambling online. They’ve perhaps been even more effective than their land-based counterparts.

While all of this is great, the real question is “did NJ online gambling lead to increased frequency of problem gambling in the state?”

The answer appears to lean toward “No.” The iDEA study cites a study recently released by Rutgers University that concludes problem gambling prevalence in New Jersey is on the rise and higher compared to other jurisdictions.

However, “only 5.3 percent of survey respondents gambling exclusively online”. From the looks of it, it’s the widespread availability of different gambling verticals in the state that have led to the spike, not online gambling.

Online gambling positioned to combat problem gambling

If anything, NJ online gambling regulation help to curtail problem gambling:

  • iGaming license holding must “maintain records of all actions taken regarding those patrons identified as potential problem gamblers.”
  • Online operators must institute onsite responsible gaming tools. These allow players to set loss limits, deposit limits and even enable them to “cool off” or self-exclude themselves from online gambling activities.
  • Players are notified when their “cumulative deposits exceed $2,500,” via a popup that they must acknowledge before proceeding.

In short, NJ online gambling sites take far more vigorous measures to protect patrons than land-based casinos.

Who is iDEA?

iDEA represents one of the first true advocacy effort for US online gaming. The trade association launched to “exclusively represent the interests of the online gaming industry in the United States.”

It consists primarily of online gaming operators and manufacturers, as well as land-based casino interests. The powerful lineup of 20 members includes such prominent names in the gaming world like Amaya, Golden Nugget, GVC, NYX, PaddyPoker Betfair, Tropicana and Ifrah Law.

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