Has The New Jersey Online Poker Market Finally Found A Floor?

July 16, 2015
Has The New Jersey Online Poker Market Finally Found A Floor?

The casino arm of the New Jersey online gambling operation continued to pull its weight in June. Despite falling just short of the $10 million benchmark dinged in each of the past three months ($9,833,133), the industry recorded its strongest year-over-year revenue gains (32%) since January.

Online poker, on the other hand, notched its worst month ever.

The market’s two networks, Party/Borgata and WSOP/888, reaped a rather paltry $1,835,576 – down a shade over 10% since June 2014, and nearly 5% from May.

Yet, relative to months prior the decline has slowed. Combined with other variables, this suggests that market stabilization – and possibly nominal growth – may be right around the corner.

To view the official NJ Division of Gaming Enforcement press release, click here.

NJ online poker on the cusp of a revival

In May, y/y revenue on New Jersey poker sites was down 15.2%. The month prior, online poker revenue dipped by a rather alarming 23.4%.

In context, a 10.4% drop doesn’t seem that bad.

Monthly comparisons also paint a modestly optimistic figure. After accounting for June’s shorter duration relative to May, daily average revenue was down just a scant 1.6%.

Again, not so bad, especially considering that June is typically the slowest month for online poker.

Supporting the notion that the grass may be greener than the top-line numbers suggest, is that from May to June of last year, NJ online poker revenue dropped 9.9% – more than double than what the industry incurred over an equivalent time frame in 2015. See chart.

NJ Poker Revenue Comparison_June

While the slowing of a prolonged downtrend is hardly cause for celebration on its own, there is fair reason to believe that July/August will be the first up months for the industry since the trees were barren:

  • The seasonal uptick typically begins to kick in after the conclusion of the WSOP Main Event.
  • Last July, the market recorded a nearly 5% m/m gain. Another smallish win was recorded in August.
  • The entry of PokerStars into the New Jersey market, which will presumably occur sometime this quarter, will undoubtedly result in a marked increase in online poker popularity. A strong initial surge, followed by modest long-term gains appears to be the most likely outcome.

New Jersey liquidity fares well in context of global market

Compared to the performance of the industry as a composite, one could make the argument that New Jersey online poker is thriving.

According to PokerScout.com/Poker Industry Pro, global cash game traffic plunged 9.6%. New Jersey shed about one-quarter (2.4%) that amount.

Furthermore, liquidity on NJ sites has been relatively stable since mid-April – proving resilient against what was a particularly vicious seasonal downtrend.

That being said, New Jersey does not possess the same capacity for growth as the rest of the market, particularly the under-served US segment.

Traffic on offshore US-facing sites has grown by 10% over the past 12 months, rendering it one of the few markets to register notable gains. It’s conceivable that this level of relative growth will remain commonplace until more states regulate online poker – and subsequently push offshore sites out.

Caesars closes the gap between itself and Borgata

Caesars came dangerously close to stripping the market share crown from perennial front runner Borgata.

The partnership of the Party / Borgata accounted for just 52% of NJ online poker revenues in June, down from 57% in May. On the casino side, the network was locked in a virtual three way tie with Golden Nugget / Betfair and Tropicana / Virgin for the market share lead.

The reasons behind why Caesars was able to pull into a virtual dead heat with Party / Borgata appear tied to the presence of the live WSOP, and subsequently WSOP.com’s heightened promotional efforts:

  • The live Series undoubtedly raised US regulated online poker awareness, with WSOP NV being the biggest beneficiary, followed by WSOP NJ in a distant second.
  • WSOP.com in New Jersey hosted a month long tournament extravaganza – the $250,000 WSOP.com Online Championship. Although the series featured its fair share of overlays, it appeared to drive increased cash game traffic.
  • The site also launched several lucrative promotions, including a $1,000 reload bonus.

However, it’s clear that Caesars spent significantly more on promotions and marketing than its sole competitor in the New Jersey market, suggesting that Party / Borgata had a far better month with regards to net revenue.

In lieu of this, WSOP NJ may feel less inclined to throw everything but the kitchen sink at NJ players next year, particularly in the absence of an interstate compact with Nevada/Delaware.

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