New Jersey's online gambling revenues falling short of expectations

By Emma Rumney
New Jersey is still waiting for internet gaming to pay off, with revenues reaching nowhere near the projected figures.

Prior to legalising online gambling last November, state Gov. Chris Christie had anticipated as much as $1bn revenue within the first year - an expectation matched by the state treasurer last April - and the Garden State was expected to profit from $180m worth of tax revenues.

But by February this year revenues had fallen far short of expectations, reaching just over $27m for the period November-February, with only $4.2m collected by the state. Yearly revenue projections have been slashed by $251m.

James Kilsby, managing director at Gambling Compliance, who supply information to the industry, told Business Week: "It's the beginning of the beginning, and it's hard to draw long-term conclusions. There is a degree of confidence that month-on-month growth is sustainable and will probably accelerate in the next few years."

Based on data from stage regulators the New Jersey Division of Gaming Enforcement, Andy Bowen at Orran Partners (orran.co.uk) provided Gambling Insider with a monthly breakdown of the state's online gambling gross win. It shows that the total monthly gross win of the six operators offering online games in the state has been steadily on the rise, increasing nearly 40% from December to February.

This is a promising sign for an industry which, as Tom Ballance, president of Borgata Hotel and Casino Spa (which Bowen's analysis shows as leading the way in the state's online gambling market) says, "hasn't been legal" and as a result "a lot of people don't know" is legal.

But some feel that this lack of awareness has been poorly combated, with State Sen. Ray Lesniak calling gambling advertisements "amateurish and insufficient".

He told the WSJ: "You have someone out there in a boat fishing and trying to gamble, or someone toasting marshmallows around a campfire and gambling. They just don't strike the right tone."

The industry has stepped up its advertising in recent weeks, but this isn’t the only hitch they've come across since November.

A federal law blocks banks from processing gambling transactions, so players have been struggling to use their credit card to place bets. While some operators such as Borgata sell prepaid cards for their players to use, many punters have had to revert to more inconvenient methods such as depositing at Atlantic City casinos. Kilsby told Business Week that this "will take months, if not years, to really change".

Abiding by regulation that requires the industry to be able to confirm their players were of age and within the state when they gambled has also proven tricky, with technology glitches interrupting play.

One player named Dennis Lopez told the WSJ: "At first you would log on and it would say you were outside New Jersey even though you weren't. You would get kicked off in the middle of playing."

However Tom Ballance says that the technology is improving, with Borgata's failure rate down from 20% to 7%.

There have been some other positive indications, with state reports showing that overall online player levels are up by 20% since November. Many players are also based far away from the state's traditional gambling centre – the brick-and-mortar casinos of Atlantic City.

But other states such as Delaware have hit rough seas with legal online gambling too, again hauling in much less than forecast and having to reconsider their figures.

Legal online gaming in the US is being threatened by billionaire casino mogul Sheldon Adelson, whose vendetta against internet gambling has aided the introduction of a bill to reinstate the Wire Act.

Sheldon sponsors the Coalition to Stop Internet Gambling and has vowed to spend as much as necessary to prevent gambling moving online.

Andy Abboud, senior vice president of government relations at Adelson's Las Vegas Sands, told WSJ that Adelson will "put his money where his mouth is" on the issue.

He continued: "A lot of people like to say the genie is out of the bottle on internet gambling. We don't believe it is."
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