What we can learn from yesterday’s news that gross gaming revenue had increased – but not as fast as many hoped
1) Previous assumptions must be disregarded
New Jersey Senator Raymond Lesniak said what many in the industry were thinking when he labelled the latest egaming revenue figures “dismal”. Despite increasing 28% on the previous month they are still a long way off meeting moderate estimates from the likes of Eilers Research, which predicts the market to be worth up to $200m by the end of the year.
That said, increasing revenues by a third compared with the previous month will satisfy some CEOs for now, especially considering issues with geolocation and payment processing are yet to be fully resolved. It’s still early days in the Garden State, and as marketing efforts ramp up and operators launch new products there is still plenty of time for the market to mature.
One question that can’t be ignored is what impact PokerStars – with its large and loyal fan-base – would have had on the market if the New Jersey regulator had not taken the decision to suspend its license application for two years. Would they provide the key to unlocking its full potential? Lesniak seems to think so.
“The less than stellar results are a result of PokerStars not being in play,” he said.
2) Online casino driving revenues
The latest figures reveal that online revenue is the driving force behind growth, accounting for 64% – or $6m – of total gross gaming revenues. For the first time since launch the Borgata saw revenues for its online casino platform ($2m for the month) surpass player spend on its internet poker sites PartyPoker.com and BorgataPoker.com ($1.8m for the month).
At Caesars Interactive the difference in revenues generated from its online poker and casino platforms for the month was negligible. Poker sites active under its licenses – including 888.com – attracted revenues of $1.52m compared with $1.51m for its online casino product. Last month poker generated $1.07m, with online casino revenues totaling $962,369.
These are signs that the market is normalizing following a surge in poker signups at launch, due to players who took a break from the game post Black Friday and UIGEA hungry to return. With online casino games yielding much greater returns, the sooner it outgrows the poker the better.
3) More players wager less
More than 70,000 new internet gaming accounts were created during January, taking the total since launch to 197,782. The rise in player signups is reassuring when compared with Delaware, which saw signups drop by more than half in its second month of regulated egaming.
According to Eilers Research, the figures imply gaming win per account of $48, down from $59 for the previous month. This, in part, can be attributed to individual players creating more than one egaming account and spreading their play across multiple platforms.
Morgan Stanley estimates that only 2-3% of New Jersey’s adult population have so far created an egaming account, so there is still a large potential player market for operators to tap into. Cue varied and innovative marketing campaigns designed to reach an array of demographics.
4) Borgata and Caesars dominate online poker
New entrants to the market were always going to have a tough battle on their hands when taking on established giants such as the Borgata and Caesars. But with the pair claiming almost 97% of the New Jersey internet poker market between them, the fight appears to be over before it has even begun.
Betfair, which provides the Trump Plaza with its online platform, has been hit the hardest with GGR from its poker product totaling just $11 for the month, down from $38 in December. Its casino product fared slightly better, with revenues totaling $556,996.
Other more established operators such as the Golden Nugget and Tropicana are yet to launch their poker platforms, but will be at a huge disadvantage having missed the first mover advantage enjoyed by the Borgata and Caesars.
It begs the question whether some operators will have to join networks like the All American Poker Network in order to boost liquidity and grow revenues. Some online operators may even decide to shelve their poker products altogether and focus solely on online casino if the long-term returns on their investments look uncertain.
5) Marketing for success
With regulated internet gambling now very much up and running in the Garden State, operators will have focus their attention on marketing in order to attract new players, grow the market and thus increase overall revenues.
Expect more high-profile sponsorship deals like the partnership signed between PartyPoker and the Philadelphia 76ers and the New Jersey Devils, and media-savvy gimmicks like 888 offering New York Giants wide-receiver Hakeem Nicks $88,800 to legally change his name to 888.com.
But what of the smaller operators with shallower pockets? Will they see the benefit of investing millions of dollars in marketing and advertising in order to claim such a small share of the pie? Or will that spend be vital in securing the future viability of their platform in the state?
It could very well be a catch-22 situation that may see one or more operators to consider their presence in the market.
In other news:
- Playtika set to acquire social gaming studio Pacific Interactive
- Nevada judge dismisses claims against Ifrah Law
- Interview: Jim Ryan is back and means business