Is New Jersey Gearing up for an Online Poker Revival in 2018?

Atlantic City is bubbling over with possibilities. By the end of November 2017, revenues in AC casinos spiked 3.2%. This will be the first time in 10 years that Atlantic City’s Boardwalk casinos will report a reversal in earnings. Between 2006 and 2016, this East Coast gambling enclave suffered as neighboring states picked up the slack and an economic downturn affected the industry. From a 2006 high of $5.22 billion to $2.6 billion a decade later, pundits were questioning the viability of Atlantic City and its mega-casino resorts. However, 2017 marked a turning point for the Garden State, thanks in large part to 100% legal online casino and online poker games.

Since inception in 2013, online casino and online poker has generated $700 million in revenues for New Jersey. By the end of 2018, gambling experts have forecast $1 billion in revenues (Gross Gambling Revenue) for NJ. In November alone, online gambling brought in $20.6 million, making it the ninth month in a row that the $20 million level was breached. For the year to date, online gambling in New Jersey is hovering around $225 million (November 30, 2017) with expectations of $250 million by the end of the year. For 2016, the total revenue generated in New Jersey through online gambling was just $197 million. In terms of where New Jersey is going – the sky is the proverbial limit.

How Does Online Poker Compare to Online Casino in New Jersey?

The total gaming industry win through November 2017 was $206,435,265, approximately $9 million more year on year. The total gaming industry win in October 2017 was $206,386,081. This represents the entire casino industry in the Garden State, including online gaming. The growth rate of 4.6% in November is remarkable, thanks largely to the 20% spike in revenues through online gambling activity.

In terms of online gambling revenues in NJ, there is a great divide between online casino and online poker. In November 2017, online casinos generated $18,800,417, while online poker generated $1,809,799. Year on year, online casinos increased by 24.6% while online poker decreased by 13.1%.

Despite these sharp declines for online poker, the total online gaming revenue in November (online casino and online poker) resulted in a 20% year on year increase, and a 0.2% month on month increase. These figures are somewhat alarming for poker aficionados, given that New Jersey is a hub of poker activity on the East Coast. Regulators are not sitting idly by while online poker revenues continue to plunge. They are working hard to cement interstate poker compacts to shore up poker revenues. In October 2017, Gov. Chris Christie signed the compact which now allows New Jersey players to join with players from Delaware and Nevada to enjoy online poker.

This will increase prize pools and player numbers, and create an economy of scale which other regulated gambling states will be able to enter. Pennsylvania will be eyeing the interstate poker network. Delaware and New Jersey will be able to broadcast the effects of this interstate compact, however comparative numbers from Nevada will not be available. The Silver State does not release gambling data related to online poker revenues. The only poker room that currently operates in Nevada is WSOP/888poker brand. Once Pennsylvania joins the party, player numbers will swell dramatically.

Will Online Poker Operators Push for Higher Numbers?

Most of the online casinos that are currently operating online poker rooms are content with the revenues being generated through online casino operations. The biggest money spinners for online gambling sites and their land-based casinos are slots. Slots account for at least 70% of all online casino revenue in New Jersey, and casino management is content to let things continue in that fashion.

Land-based poker rooms in Atlantic City generated $2.46 million in revenue, which is 42.7% lower than November 2011. Between 2006 – 2017, poker revenues have consistently declined, but this trend is flattening out. The only time since 2011 that poker revenues increased was in 2013. Between 2016 and 2017, the declines are less apparent, and 2018 might be the first year in recent history that New Jersey reports modest growth in poker revenues. In 2017, experts are anticipating $28.46 million from poker, down 10.4% year on year.

The reasons for poker’s declining growth figures are varied. For starters, there has been tremendous consolidation in Atlantic City, from 12 casinos 5 years ago to 7 casinos today. This has decreased the number of poker rooms in play. In 2011 there were 296 poker tables and 8 poker rooms, and now there are just 207 tables and 5 poker rooms. Fewer facilities means lower revenues – all things being equal.

The flipside of the coin is that fewer tables should be packed to capacity, boosting overall poker revenues in Atlantic City. However, this has not happened. It worked for the casino industry by reducing the competition, and allowing existing casinos to benefit.

Poker is Geared Towards a Niche Group of Players

Perhaps, experts claim, it is the game of poker that may be hampering its own development. Poker revenues as a percentage of total gambling revenues have consistently dropped from 1.8% to under 1.5% since 2011. The declining trend is more an indicator of the popularity of casino games than it is an indictment of poker games.

Poker is a game enjoyed by a niche group of people. It is a skill and strategy-based game that requires immense powers of concentration, a mathematical mindset, and an intuitive understanding of human psychology. Slots, Roulette, Craps, and scratch card games require no notable skills. In 2017, poker is expected to comprise just 1.18% of all gambling revenue.

Many pundits who are dissecting the online poker industry, scratching their heads and wondering what’s going on have also suggested that perhaps it’s the low liquidity cap of the NJ online poker market that is causing the problem. However, when Pennsylvania, Nevada, and Delaware are thrown into the mix, this could provide a much-needed boost to the ailing poker industry in the state. Every year since 2013, online poker revenues have made up an increasingly smaller percentage of overall revenue.

In 2013, this figure was 38.3% (November and December), declining to 23.7% in 2014, 16% in 2015, 13.5% in 2016, and 9.9% for 2017. Once again, the percentages are less important than the growth in online casino popularity in the Garden State. There are diehard poker fans scattered across New Jersey, Delaware, Nevada and elsewhere. The growth that is taking place in the online gaming industry is clearly a result of online casino fans taking to this new form of entertainment.