Online Poker Revenue in New Jersey Reaches New Low
Revenue garnered by the state of New Jersey in September, through taxation of the state’s online poker regulation, fell to the lowest point since the industry was legalized in November of 2013.
Figures released recently by the New Jersey Division of Gaming Enforcement (NJDGE) indicate that $1,771,123 in total revenue was recorded during September, with that amount spread amongst the state’s four online poker rooms. The total represents a 10.7% reduction from August, and a 15% decline from September of 2014.
The fall continues a downward trend for New Jersey’s fledgling online poker industry, which has seen monthly revenue decrease from $2.3 million in January of this year to September’s record low. Over that time, monthly online poker revenue fell each month between March and June, before bottoming out in September.
A similar situation occurred in 2014 as the Garden State’s online poker industry entered its first full year of operations. In January of 2014 monthly revenue totals topped the $3.4 million mark – which remains the industry’s peak thus far – before experiencing significant declines for several consecutive months. The figure plummeted to just over $2 million by December of 2014.
When online poker, along with other casino games like blackjack and slots, resumed legalized and regulated play in New Jersey in December of 2013, three years had elapsed since government intervention suddenly forced the industry to shutter. In the wake of that decision – a day poker players and media have dubbed “Black Friday” – the return of online poker in New Jersey was hailed as a potential stepping stone to full federal regulation. A wave of excitement and enthusiasm buoyed the industry during those early days, along with generous promotions designed to entice new players, but both are on short supply today.
The state’s four online poker rooms – BorgataPoker.com, PartyPoker.com, WSOP.com, and 888Poker.com – have managed to build a small but steady core of regular players. During the early months of last year, these online poker rooms reported average traffic for their cash game tables at between 500 and 600 players at any given time. However, during the majority of 2015 cash game liquidity for the state’s four online poker venues has stagnated, falling to around 300 players on average.
In addition, the four sites have routinely been forced to pay into tournament prize pools when advertised guarantees were not met. These costly overlays only cut further into New Jersey’s total online poker revenue, and as a result, monthly revenue figures have continued their steady descent during recent months.
Industry insiders provide an accurate accounting of the biggest winners on each of New Jersey’s online poker platforms, and over the last year these lists have been consolidated by an ever-shrinking pool of professional players. After the initial rush of amateur players taking their shot online poker patronage in New Jersey has plummeted by nearly half, prompting many industry experts to question the level of demand for online poker more than a decade removed from the “poker boom” of 2003.
Proponents of online poker’s regulated return based much of their initial support on optimistic income projections that were made during the state’s legislative debates on the issue during previous years. At that time, state officials published reports indicating that online poker revenue could reach $180 million during the 2014 fiscal year. Those forecasts were then reduced to $160 million by the time Governor Chris Christie signed the bill into law, but with average monthly revenue totals hovering around the $2 million mark, both predictions have missed the mark by a wide margin.
As noted by Chris Grove, editor of the Online Poker Report, in a 2014 report published by USA TODAY, the projections released by New Jersey during the legislative debate were never realistic in the first place. Grove stated that both the $180 million and $160 million figures were “driven far more by political need and budgetary magic math than by sober, rational analysis of the market.”
According to Grove, the fact that New Jersey relied on estimates that included a full fiscal year of operations was misleading, as the online poker industry did not launch into midway through the fiscal year. In his estimation, the state’s online poker revenue is actually on target for a newly developed industry, especially one suffering from the stigma of prohibition. “This is an industry that requires consumer education,” Grove told USA TODAY. “It exists in a weird gray area because it was perceived to be illegal for so long.”