PokerStars Captures Half Of New Jersey Online Poker Revenue; Industry Reaches Two-Year High

A reinvigorated New Jersey online poker industry posted its highest revenue tallies in two years.

The top-level numbers for NJ online poker

Figures reported by the NJ Division of Gaming Enforcement on Thursday revealed that the state’s three operators generated a total of $2,587,845 in April, a modest 5.2 percent improvement over last month’s figure.

That was also just $4,000 less than the benchmark it achieved in April 2014 — back before the novelty of U.S. regulated online poker had completely worn off.

The industry’s recent growth — revenue is up nearly 30 percent in the past two months — was fuelled exclusively by the entry of PokerStars, who in April, celebrated its first full month in the market.

Casino gets a boost, too

PokerStars’ entry made waves on the casino front as well, as the trio of PokerStars Casino, Resorts Casino and Mohegan Sun Casino nearly doubled its March revenue, from $1,280,420 to $2,300,271.

The growth of Resorts’ casino arm accounted for just over 75 percent of total casino growth, as online casinos in New Jersey set yet another monthly revenue record. They were up 10.3 percent over the slightly longer month of March to $14,392,904.

Total industry revenue cracked the $16 million (and almost the $17 million) barrier for the first time in April, with the final tally of $16,980,749 representing a 9.5 percent monthly increase, and annual growth of 33.8 percent.

Yet, not everyone had reason to celebrate, as a significant portion of PokerStars’ online poker revenue was siphoned from existing operators WSOP/888 and Party/Borgata.

Full breakdown of the numbers here.

PokerStars catapults to the lead, but at what cost?

It took just one full month for PokerStars to capture a 45.5 percent marketshare. The worldwide marketshare leader generated $1,177,837 in April, up from $597,677 in March — a month when it only hosted full operations for 11 days. It was only open for business in any capacity from the 16th onward.

Overall, online poker revenues were up 30.4 percent, or $602,556 year-on-year, indicating that only about half of PokerStars’ revenue was additive.

The rest came at the expense of Party/Borgata and WSOP/888, both of whom saw their online poker revenue dip to all-time lows.

Party/Borgata revenue fell from $1,126,444 to $745,917 year-on-year, a 33.8 percent falloff.

WSOP/888 fared somewhat better. Revenue on the network was down 22.7 percent from last April to this, falling from $858,845 to $664,189.

PokerStars’ daily revenue of $37,354 for March was very much in tune with the same statistic for April ($39,261). That comes off as a bit of a disappointment, considering that from March 16 – March 20 the site did not run any major tournaments, and capped liquidity at 500 concurrent players per day.

Cash game traffic not the gold standard for success

After reviewing the latest revenue figures, one thing becomes abundantly clear: Cash game traffic is not the only variable by which online poker success in New Jersey should be gauged.

Listed below are cash game averages, by operator, along with each operator’s cash game and revenue market share for the month of April (data provided by Poker Industry Pro via PokerScout.com):

• PokerStars NJ: 149 players, 40 percent cash game share, 45.5 percent revenue share
• WSOP/888: 135 players, 36 percent cash game share, 25.7 percent revenue share
• Party/Borgata: 89 players, 24 percent cash game share, 28.8 percent revenue share

Notice that on Party/Borgata and even more so on PokerStars NJ, revenue share exceeds cash game share, while on WSOP/888, the opposite is true. And in all cases, the correlation between cash game traffic and revenue is a rather loose one.

What this tells us is that we have to look beyond cash game liquidity in order to gauge a site’s viability.

For instance, PokerStars’ revenue share is higher than its cash game share due (presumably) to the overwhelming success of its Spin & Go format. That tourney type has become a money-printing machine in every region in which it has launched.

WSOP/888 tends to rely more on cash game traffic for revenue, mainly because it does not feature a lottery SNG variant, and furthermore, because its tournaments adhere primarily to the rebuy and add-on format.

That format tends to feature lower buy-ins and entry fees than traditional MTTs. And unlike reentry tournaments, R&A players are not charged additional fees for firing multiple bullets, resulting in significantly less revenue per MTT for the operator.

On the cash game side, it seems that WSOP/888 attracts a more net depositing and recreational stock than either PokerStars or Party/Borgarta, with the majority of its players mixing it up at the $.25/.50 and under games. By extension, the site is likely generating less revenue per hand of poker played than either of its competitors.

Predictions for May in NJ

Last May, online poker revenue dipped slightly, 2.9% month-on-month.

This year, one can make a strong argument that the fall-off will be significantly worse, for the following:

• Cash game liquidity in New Jersey is trending down, falling nearly 10 percent since May 1.
• The seasonal downtrend tends to accelerate as we draw closer to June.
• The novelty of PokerStars’ reentry in the U.S. has died down.
• Professional players may be on the road, first traveling to play in the PokerStars.com SCOOP, and then off to Las Vegas for the live WSOP.

But I tend to think revenue will hold mostly flat, as the onset of the first annual NJ SCOOP, hype generated by the Run it Up Resorts Rumble event and an increase in free flowing cash derived from lucrative promotions on WSOP/888 and PokerStars should offset any variables working against the market.