One hopes when online gaming was introduced in New Jersey was that it would help revive the struggling casinos of Atlantic City. While all online operations have to be tied to an existing Atlantic City casino, their performance has been yet another disappointment.
The expectations for online gaming were high when it was introduced in November with Gov. Chris Christie predicting it could rake in as much as a billion dollars a year. And while few analysts expected returns to be that high, Alex Bumazhny of Fitch Ratings thought revenues would reach at least $200 million to $300 million.
Last week, he cut that estimate in half, to somewhere between $120 million and $130 million.
“What you’re seeing with the weakness is really a surprise to most people, including the [operators] themselves,” Bumazhny said.
After New Jersey got off to a decent start of about $11 million a month, the total online gambling revenues plateaued and actually declined in April, May and June.
Bumazhny said it’s not clear what went wrong.
“It could be seasonal, that people are retracting from online gaming because they have more options during the warmer weather including going to the actual casinos themselves,” he hypothesized. It could be that federal laws aimed at policing online gambling are discouraging the use of some credit cards or that companies are doing less marketing than they did to kick off Internet gaming.
A representative of Caesars online division wrote in an email that the company has come up with more payment methods and still has a marketing campaign. Seth Palansky insists the company had no revenue targets, “since this was a new market and a new category. There was literally no basis to project from.”
The Golden Nugget’s Alicia Brown said her casino had expected “the market size to be 30 percent to 40 percent bigger by now. But, because our market share is higher than targeted, we are close to our revenue targets.”
She said their online revenues actually grew during the past two months.
Palansky said Caesars remains “bullish” on New Jersey’s prospects.
Frank Farrell, a Pennsylvania resident who plays online poker when he visits friends in New Jersey, thinks games of chance just don’t appeal as much on the web.
“You’re looking at a picture and watching a wheel go around. That’s all you’re doing. There’re no sounds like when you’re in a casino,” he said. “There’re no people screaming, ‘Hey.’ That’s part of the allure of the casino.”
While gambling on a computer may be less fun, the estimates for New Jersey were based in part on the success of online gambling in Europe and in the U.S. before online gaming was regulated.
Unless gaming companies can figure out why gamblers aren’t rushing to Internet casinos this time, boosters of the ocean resort will continue to be disappointed in the online take.
Editor’s note: This story has been updated with information from The Golden Nugget casino.