This time last year, New Jersey was abuzz with the potential for revenue growth in its emerging online poker and casino market. The results have been lackluster, to say the least, and a heavy decline in October’s online poker revenue, combined with the recent closure of Ultimate Poker (UP) in New Jersey and Nevada, could portend a disastrous fate for the industry in the Garden State.
The NJ Division of Gaming Enforcement released its revenue reports for October last week, and the results were anything but inspiring. Interactive peer-to-peer gaming (i.e. online poker revenue alone) generated just $1,967,904, dipping below the $2 million mark for the first time since the market’s launch in November of 2013. That figure represents a 5.64% decline in online poker revenue compared to last month’s September results. However, when factoring in the additional day in October (31 days, as opposed to 30 in September), the day-to-day average falls a reeling 8.67%.
Historically, October is a month when online poker players take to the tables more frequently, boosting profits for operators. That clearly wasn’t the case in New Jersey, where industry analysts now fear the worst. And when you consider the recent downfall of Ultimate Poker, it’s hard to discount their uncertainty.
Two months ago, Ultimate Gaming, owned by Las Vegas-based Station Casinos LLC, was forced to pull out of the New Jersey market, not just because UP was failing to draw more than 3% of the state’s consumers, but because its land-based partner, Trump Taj Mahal, filed for bankruptcy and announced its intentions to shut down. Then, last week, the company issued a statement confirming the closure of UP in Nevada, effective November 17. Despite being the first US regulated online poker site – or maybe because of that fact, having rushed an immature product to market – UP never became a solvent operation in either state.
The online poker market in New Jersey is left with just 4 operators, under the ownership of two companies; The Borgata’s Party Poker and Borgata Poker, tied together via the Party Borgata Network, and Caesars Interactive’s WSOP NJ and 888Poker, operating on separate networks. Borgata was responsible for 54% ($1,056,711) of the total online poker revenue in October, while Caesars claimed the other 46% ($911,193). Translation; Party Borgata’s revenue slumped 9.21% last month, while Caesars saw almost no change at -0.37%.
Clearly some changes need to be made to prevent the online poker market from fading into the quagmire. Additional promotions and more attractive tournaments would be a good start, but it will take more than that. Increasing the industry’s competition could be highly beneficial, so long as that competition comes from a brand the state’s online poker community already holds in high regard. Of course, I’m referring to PokerStars. Its introduction to New Jersey would create a flurry of competition between all operators, which would only stand to benefit players and intensify traffic all round.
Increasing liquidity with cross-state player pooling should be the ultimate goal. Nevada and Delaware simply don’t have the population to maintain a respectably lucrative, ring-fenced campaign, and New Jersey hasn’t proven itself to uphold one either. Combining all three states, though, as well as any other jurisdictions that may regulate online poker in 2015 (except California, having time and time again declared its intention to go solo), could result in enough liquidity to turn the markets around, as well as encourage other states to get in on the action.