New Jersey Online Poker Revenues Bottom Out In September

After exhibiting modest growth in July and August, the New Jersey online poker market has found a new floor.

According to figures published by the New Jersey Division of Gaming Enforcement last Thursday, the fledgling industry only managed to generate $1,771,123 in September, falling 3.5 percent shy of its previous low point set in June.

September marks the sixth consecutive month in which the industry has failed to break the $2 million barrier; a feat it had accomplished in thirteen of the fifteen months prior. It also represented a 10.7 percent monthly decline for NJ online poker, and an annual drop of 15.1 percent.

Conversely, the state’s online casino arm continued to put forth a strong performance, generating just north of $10.25 million in September, which was good enough to beat last year’s statistic by an impressive 25.6 percent. Online casino revenues have held remarkably steady since March, only falling below $10 million once during that time span.

Not as bad as it appears

If there is one positive takeaway, it’s that there were several extenuating circumstances that artificially depressed NJ online poker revenues:

• September is one day shorter than August. Accounting for this, online poker revenue was only down 7.7 percent for the month, not 10.7 percent.
• Labor Day weekend began on September 4 this year compared to September 1 in 2014, meaning grinders had a few extra days to enjoy the throes of summer.
• September was an exceptionally warm month in New Jersey, with temperatures regularly eclipsing 80 degrees. Also, sunny days outnumbered rainy ones by a significant margin.

The last point warrants additional consideration. Last September followed a similar pattern of above average temperatures and a sharp monthly decline in online poker revenue. It appears, at least in constrained markets such as New Jersey, that the weather plays a significant role, if not dictates, online poker liquidity.

The correlation between weather and revenue does not appear to be as strong when applied to online casino.

All of this is not to make excuses for what was by all accounts a dismal performance by New Jersey’s two online poker operators (Party/Borgata and WSOP/888). Instead it merely suggests that revenue was more in line with expectations than what shows on paper.

Caesars losing ground on Borgata

Both the Borgata and Caesars posted their lowest Internet poker tallies to date, of the two, Caesars turned in the weaker performance, and not by a small margin.

Caesars reaped $820,913 in September, $112,589 (12.1 percent) under its August total, and nearly $11,000 below its revenue for May, which up until recently was the operator’s worst month in the industry’s nearly two year history.

The Borgata’s situation isn’t quite as grim. September online poker revenue was a mere $600 below its previous low point, and monthly revenue fell by just under $100,000. The operator currently controls 53.7 percent of the market, up from 52.9 percent in August.

This, despite September cash game averages recorded by PokerScout.com showing WSOP/888 holding a sizable lead (168.1 vs. 114.4) over its sole competitor.

With each passing month, it’s becoming more apparent that both player value on Party/Borgata is higher and that the operator generates a more significant chunk of its revenue from tournaments.

Interestingly, Caesars online casino revenue held relatively flat in September, while the Borgata absorbed a sizable hit, down 7.4 percent to $2,432,864. This observation lends credence to the theory that the introduction of PayPal on Caesars affiliated online gaming sites last month was more effective at attracting casino patrons than poker grinders.

On a side, it comes as some surprise that the PayPal option has had no material impact on Caesars’ online poker liquidity. What may have occurred is a “too little, too late” scenario, where online poker players that tried to deposit on a NJ regulated site previously and failed never bothered to see if the payment processing situation had improved.

Future outlook

At least on paper, it appears that the industry will sink into a further depression. Both October and November were down months for NJ online poker in 2014, with the seasonal uptick finally kicking in around December.

Not to mention, both 888 and Party have all but abandoned their promotional efforts, leaving Borgata and WSOP to pick up the slack. Unfortunately, they too have fallen into a rather lazy promotional pattern.

On an optimistic note, cash game liquidity is up modestly on both networks thus far in October. Not to mention, the unambitious GSSS III and even less aspiring WSOP.com Fall Poker Festival should bolster revenues, if only because their smallish scope should result in fewer overlays.

Yet, until PokerStars launches in New Jersey, which will probably not happen until at least January 2016, expect New Jersey online poker to remain on life support.