New Jersey Online Poker Market (Barely) Treads Water In July

Led by yet another strong performance from its casino arm, the New Jersey online gaming industry won $12,531,991 in July – it’s third-highest tally since going live in November 2013 and strongest showing since April.

Of that figure, the state’s virtual slot machines and table games generated an impressive $10,646,306.

The outcome wasn’t quite as rosy on the online poker front, as the industry’s lesser half accounted for just 15 percent ($1,885,685) of iGaming revenue, its lowest percentage share of the market to date.

But it wasn’t all hum and drum for the state’s poker operators, as the end of the seasonal slump brought with it modest monthly gains of 2.7 percent. Year-over-year revenue was down 12.2 percent, which was slightly more than last month, but still significantly less than the sharp yearly declines noted in Q1 2015.

The official report from the New Jersey Division of Gaming Enforcement can be found here.

Growth of NJ online poker in short-term unlikely

A pattern has emerged of late, one in which New Jersey’s online casinos consistently post incrementally stronger yearly gains while poker remains relatively stagnant.

To illustrate this growing disparity, online casinos posted y/y gains of 21.2 percent in April, 28.7 percent in May, 31.9 percent in June and 34.4 percent last month. Poker, on the other hand, has regularly registered annual losses of between 10 to 15 percent since May.

Furthermore, while gains of 2.7 percent month-over-month might suggest that poker is on the cusp of a revival, other indicators firmly dispel that notion:

• Last year, revenue was up 4.8 percent in July.
• Despite modest gains, New Jersey’s poker arm still registered its third-lowest revenue figure.
• After accounting for the extra day in July, daily revenue averages were actually down .5 percent month-over-month.

All of which is not to say that New Jersey’s poker operators are failing at their jobs, more that poker is a game that relies heavily on liquidity, of which there is limited supply in ring-fenced markets.

Casino operators are not as greatly impacted by the same limitation.

Therefore, in the absence of a major shakeup, which could be coming if PokerStars launches before October as expected, there’s little reason to believe that any sort of major revival on the poker front is in store.

Instead, look for the seasonal uptick to propel poker to a smallish win in August.

Last year, liquidity rose 4.9 percent m/m. Similar gains would not be unexpected, especially since by now NJ players who migrated out to Nevada for the WSOP Main Event have long since returned home.

Performance relative to global market offers glimmer of hope

On a somewhat optimistic note, New Jersey’s poker sites stacked up quite well against the global market, which according to Poker Industry Pro via PokerScout.com saw cash game liquidity drop 4.3 percent throughout the month of July.

Conversely, liquidity rose 11.2 percent over an equivalent span in New Jersey, and seems on target to notch at least an incremental gain this month.

While we’re on the topic of favorable comparisons, the downswing afflicting the offshore US-facing market continued into July, with average player counts dropping another 3.8 percent. Since March 5, illegal sites serving most US states have seen their average daily player counts dip by 20 percent.

Whether this decline has any correlation to the increased focus on regulation in several US states is difficult to determine, but considering that traffic in New Jersey is also down upwards of 20 percent since March, it appears more indicative of the general decline in online poker popularity.

Borgata widens its lead over Caesars

After coming dangerously close to losing the market share lead in June, the partnership of the Borgata and PartyPoker widened the gap between itself and Caesars.

The Borgata generated $999,322 in online poker revenue, marking only the third time it has failed to eclipse the seven-figure barrier, but still representing a 5.1 percent improvement over last month.

Caesars revenue stayed largely flat, inching up 0.2 percent to $886,363.

Interestingly, despite holding only a 47 percent revenue share, Caesars’ two sites – 888poker and WSOP.com – control a majority share (60 percent) of cash game traffic.

What this suggests is that:

• Borgata generates more revenue on the tournament side.
• The average player value on Borgata is significantly higher than it is on Caesars.
• Some combination of the two.

Expect the market share split to remain largely the same in August, with Caesars pulling slightly closer based on the strength of WSOP’s (or weakness of Party’s) promotional schedule.