Nevada is the only state that has launched online gambling. Unlike the future online gambling industry in Delaware and New Jersey that will include casino games, Nevada only allows online poker. This is just one obstacle that may hurt Nevada’s goal of being the leader in the U.S. online gambling industry.
The Delaware Lottery expects to go live on or about September 30, 2013. New Jersey has set its launch date as November 26, 2013. While Delaware may go live first, New Jersey is expected to far more successful due to its population base.
Factors Affecting New Jersey Online Gambling Growth
New Jersey’s population is more than triple that of Nevada. That fact by itself could potentially give New Jersey an advantage in the online gambling world, but there is more to the story.
New Jersey is coming to the online gambling table more organized than Nevada. Ultimate Poker has struggled to bring its next generation online poker platform to market in Nevada three months after its launch due to strict testing requirements. WSOP.com and South Point Poker have been unable to go live during the same time, presumably for the same reason.
New Jersey appears to be in a situation where it can bring every potential online gambling brand to market within 120 days of applications being accepted. By weight of comparison, Nevada started approving online poker companies in April 2012, but over 16 months later has only been able to bring one product live.
Nevada has yet to approve online casino games as a part of its interactive regulations. New Jersey will likely have casino games live by the end of the year.
While New Jersey online poker players may not like the fact that poker dollars will compete with house games, Atlantic City casinos and the New Jersey tax base will enjoy this benefit. New Jersey has hopes that interactive gaming will help revive its struggling Atlantic City casinos. The interactive tax rate in New Jersey is more than double that of Nevada. Players may not see that as a positive, but these additional funds will help the state’s budget.
It is impossible to discuss online gambling in New Jersey without including the biggest name in today’s online poker market. PokerStars, whose market share is about eight times larger than its closest competitor (according to Pokerscout.com) could be the deciding factor in New Jersey’s success. It remains to be seen if PokerStars will receive a license, but if it can pass the suitability process, then there is no doubt that it will be one of the brands to beat. The World Series of Poker is the only other brand that is as recognized by poker players. Of course, the mailing lists owned by the casinos will also play a role in each operator’s success.
Nevada has virtually no border population that can take a day trip across the border to participate in its games. New Jersey borders two of the largest metro areas in the United States. Players that reside in New York City and Philadelphia are close enough to spend a day across the border with little effort. While the past generation used to find a back room bar across the border to gamble, today’s potential gambler will only need to find a wireless internet connection across state lines to play their favorite games. Players will quickly discover which coffee shop or bar provides a local IP address. Cell phone triangulation will do the rest.
Nevada uses cell phone triangulation to identify a player’s location. If New Jersey uses this same system, wireless internet locations will need to be more than one mile inside the New Jersey state line to be used for online poker and casino games hosted in Atlantic City.
One issue that has occurred in Nevada is that some hotels and retail wireless locations use out of state internet IP addresses. Companies that recognize the potential loss of business caused by long distance internet connections will find a way to resolve it. Internet cafes that specifically facilitate online gambling as its sole business are not allowed by New Jersey interactive law, but businesses that simply provide internet access while providing another viable service are allowed. This could become a new industry in itself.
Same Day Launch
While a same day launch by all licensed sites is the fairest deal for operators, it may actually be a negative for online poker players. Ultimate Poker has enjoyed a regulated monopoly in Nevada. Player pools peak in the 400-500 range. The next entrant to the market may fragment this. New Jersey will not have this same problem, but on the other hand it may create a liquidity problem with online poker rooms as many will go online at the same time.
The fact that casino games are allowed may also affect the poker side of the interactive business. Atlantic City casinos may be less inclined to focus on poker as the real money will be made on slots and table games.
It will be interesting to see how much more successful New Jersey’s interactive gaming industry is in comparison to Nevada’s online poker industry. Considering the population differences, the population density just across state lines, and the addition of casino games, it could prove to be significant.