NJ Predicts Internet Gambling Will Pick Up in '14

Internet gambling is off to a slow start in New Jersey, but nearly everyone involved or interested in it expects online betting to gain steam in 2014.

The key question remains: Just how much better will things get?

Figures released last week by the state Division of Gaming Enforcement showed New Jersey's 15 authorized Internet gambling sites took in $8.4 million between the Nov. 21 launch and the end of the year.

At that rate, Internet gambling would bring in less than $100 million for the year — far less than the $200 million to $300 million many analysts forecast and about 10 percent of the $1 billion in revenue Gov. Chris Christie said he was counting on when he signed the bill legalizing it.

"Everybody needs to take into consideration that this industry is in its infancy," said Tony Rodio, president of the Tropicana Casino and Resort. "There will be mobile applications, and a lot of the slot content isn't operational yet.

"I'm encouraged by how many user accounts that people have signed up for and that there's interest in it," he said. "You'll see this grow quickly."

As of Jan. 12, users had created 155,374 accounts with New Jersey gambling sites, though officials say many users have accounts on more than one site.

Rodio predicted the addition of Internet gambling will be enough to end a seven-year losing streak for Atlantic City's casinos, whose revenue has fallen every year since 2007, when neighboring Pennsylvania ramped up its own casino industry.

Two companies are dominating the online market in the early going in New Jersey. The Borgata Hotel Casino & Spa, with its Party Poker online brand, took in more than $3.7 million. Caesars Interactive, which runs sites including the WSOP and 888 brands, won nearly $2.4 million.

Other competitors lagged badly in the online market. The Trump Taj Mahal Casino Resort and its ucasino brand won $883,000. The Tropicana Casino and Resort won $748,000, Trump Plaza Hotel Casino and its Betfair online brand won $427,000 and the Golden Nugget, whose launch was delayed for weeks by technical problems, won $179,000.

Thomas Winter, the Golden Nugget's vice president of online gambling, said the casino is pleased with its start and is expecting substantial growth of 20 percent per month this year. Right now the casino accounts for 4 percent of New Jersey's online market, but it expects to win 7 to 10 percent of the market "over time," he said.

Winter, like executives at the Borgata, said online gambling doesn't appear to be cannibalizing the existing land-based casino's business, at least so far.

"Slightly more than 50 percent of our online customers were not regular customers at the Golden Nugget or were not customers at all," he said. Long-range estimates envision that 60 to 70 percent of online players will not be regular customers of the physical casino — creating a marketing opportunity to encourage them to do so, Winter said.

Peggy Holloway, senior vice president of Moody's Investors Service, wrote in a report last week that Internet gambling "will do little to brighten the fortunes of Atlantic City's beleaguered gaming operators in the near future."

"While internet gaming is starting off slowly, the pace of growth will accelerate as issues with payment processing and geo-location technology are ironed out and operators ramp-up their marketing spending to educate consumers that online gamine is available," she wrote, repeating the firm's estimate that Internet gambling should generate $250 million to $500 million a year.

Chad Beynon, an analyst with Macquarie Capital, called the early numbers disappointing.

"With 7 million adults in New Jersey, and others who may 'stop in,' we estimate the market to grow to $200 million to $300m by 2015, cannibalizing $25 million to $50 million of land-based revenues," he wrote in a report last week. "We do note that it's early and many of the TV advertisements just recently started."

David Rebuck, director of the state Gaming Enforcement Division, said he is pleased with how things have gone so far. Problems with geo-location technology, which has wrongly shut out some players whose physical location couldn't be verified, are being worked on, and the overall technology appears to be working well, he said.

"Internet gaming remains in its infancy in New Jersey," he said. "From a regulatory perspective, the systems are working as anticipated and we are encouraged by the operations. I am optimistic that we will see continued growth as the properties begin to increase their marketing efforts to attract more customers."

Copyright AP - Associated Press
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