The List Of Reasons For Optimism About NJ Online Gambling Keeps Growing

August 10, 2015
The List Of Reasons For Optimism About NJ Online Gambling Keeps Growing

Fueled by exceptional performances from its online casinos, the New Jersey iGaming industry generated more revenue in Q2 2015 than in any quarter to date.

Currently, the industry is on tap to pull in just under $145 million in 2015 – a notable sophomore effort that would represent a 17 percent uptick over last year.

Yet, positive momentum on the online poker front and the emergence of the Resorts brand suggest that the industry will aspire to even greater heights.

NJ online poker poised for a revival in H2 2015

A quick study of the numbers reveals that online poker has struggled tremendously.

After consistently winning more than $3 million per month in its early days, operators haven’t been able to eclipse the $2 million benchmark since March. Year-over-year revenue is down by double digit margins and at $1,835,576, June was the worst month for NJ online poker in its nearly two year history.

While these figures aren’t exactly cause for optimism, they only tell part of the story.

The rate of attrition has slowed dramatically, down from a 34.2 percent year-over-year revenue decline in February to 23.4 percent in April and 10.4 percent last month. This trend effectively dispels the notion that NJ online poker is in a state of steep decline, instead suggesting that market novelty and high marketing spend artificially pumped up revenue tallies in H1 2014.

In truth, July will likely be the first month in which meaningful year-over-year comparisons can be drawn, and that comparison should reveal a market that has largely stabilized.

Going further, there are indicators that monthly revenue tallies may soon supersede last year’s totals:

  • According to Poker Industry Pro via, July was a strong month for online cash games in New Jersey. From July 1 to 31, 7-day averages rose nearly 11 percent. Last year, liquidity only climbed 3 percent.
  • At least one online poker operators, the Borgata, is currently operating in the black. This may compel the company to increase its focus on its online product.
  • There have been nominal improvements in the areas of mobile technology and payment processing over the course of the past year.
  •‘s promotional schedule and new format offerings target casual players, which may help to balance the fragile poker ecology in the long run.
  • Based on remarks from Amaya CEO David Baazov, PokerStars is expected to launch in New Jersey sometime within the next two months.

There are however, a couple of variables that could slow the growth of the market:

  • In lieu of 888‘s proposed acquisition of, PartyPoker NJ may take an exceedingly passive approach to its NJ poker product. The utter dearth of August promotions complements this theory.
  • Operators in niche markets struggle to replace depositing players. In order to curtail the bleeding, NJ operators may have to alter their paradigm to one that more closely resembles the one recently adopted by Full Tilt. That seems unlikely to happen over the next several months.

After assigning appropriate weights to each of these factors, and assuming that PokerStars’ launch comes late enough into Q3 that it won’t have a material impact on revenue, I see revenue rising 0 to 5 percent y/y in Q3.

In actual monetary terms, that equates to roughly $6.5 mm to $6.8 mm, or a $750k to $1.05 mm uptick over Q2.

PokerStars, and its impact on Q4 revenue

Moving to Q4, the entry of PokerStars will be impactful yet hardly a game changer, for the simple fact that in the absence of an interstate compact with a state of meaningful population, the potential of the New Jersey market is capped rather low.

That being said, a strong initial marketing push plus the return of players unsatisfied with existing operators may precipitate a revenue surge of 20 to 30 percent in month one, followed by lesser gains in following months.

The magnitude of those lesser gains partially hinges on how well PokerStars’ NJ software and customer service stack up against its ROW offering. The operator’s willingness and success integrating online and land-based will also play a role.

On balance, expect the long-term impact of PokerStars presence in New Jersey to result in revenue increases of 10 to 15 percent.

Combined with the variables previously mentioned and the annual seasonal uptick, this should result in fourth quarter poker revenue of between $7.1 mm and $7.4 mm, representing at minimum a 20 percent year-over-year gain.

Thanks to Resorts, online casino growth should accelerate in H2 2015

The outlook for New Jersey’s online casinos is even brighter, as the industry posted y/y gains in each of the first six months of the year. The breadth of these gains has varied somewhat, but generally falls between 21 to 32 percent.

In the absence of any major changes, there would be little reason to believe this positive trend wouldn’t spill over into the second half of 2015. However, there is one wildcard that should propel casino revenues even higher, and that’s the upstart Resorts brand.

Resorts launched a self-branded casino in February. After registering a modest $154,071 in its first month of operation, revenue has grown by at least $72,000 in each successive month, culminating in a $400,600 win for the month of June.

The operator’s willingness to integrate online and land-based has proven unmatched in New Jersey, which may eventually propel it to the heights reached by the state’s highest revenue generating sites.

As for the short term, expect‘s continued growth to vault online casino revenue by $200k to $300k in Q3 2015 – and pending the site doesn’t reach maturity prematurely, even more in Q4.

Further hoisting Resorts’ revenue is the recent Mohegan Sun’s online casino product. Based on the same NYX Gaming powered platform as, may prove even more successful than its sister, as it offers a more aggressive first-time deposit bonus and carries the name of one of the best-known casino brands on the east coast.

Also, the marriage of PokerStars and Resorts is likely to transcend beyond the online product, drawing increased attention to Atlantic City’s oldest casino, and subsequently, back to the online properties.

With all these factors in mind, it’s conceivable that Resorts will generate an average of $700k to 750k per month in Q3, and upwards of $1 mm the following quarter.

Assuming consistent year-over-year patterns for the rest of New Jersey’s online casino industry, I expect Q3 revenue to be somewhere between $30.5 mm to $33 mm and Q4 totals to be just a tad lower at $30 mm to $32.5 mm.

The bottom line

After summing up our predictions for online poker and casinos, here are the bull and bear case scenarios for NJ iGaming in Q3/Q4:

Quarter 3 2015

  • Bear: $37 mm
  • Bull: $39.8 mm

Quarter 4 2015

  • Bear: $37.1 mm
  • Bull: $39.9 mm

In even the most reserved scenario, NJ iGaming will generate over $74 mm in the second half of 2015, placing it ahead of first half tallies by 3 percent.

Best case, the industry grows by an impressive 10 percent margin and lands at just under $152 mm for the year – a 23.5 percent improvement over the industry’s first full year in the business.

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