NJ iGaming Weekly: Despite Rising Volume, Revenues Dip for Third Consecutive Month

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A recent press release from the DGE revealed that revenue tallies for New Jersey‘s online poker market were down 9.92 percent from May to June.

While prospects for July look marginally better, June marked the third consecutive month in which the state’s regulatory committee has reported diminishing returns.

But unlike months past, the falloff in New Jersey appears less severe than the one experienced by the entirety of the Internet poker industry, which saw cash-game traffic bottom out at its lowest point in over two years.

In this iteration of NJ iGaming Weekly we’ll take an in-depth look at the numbers, and examine why cash-game trends may be a better indicator of market performance than monthly revenue totals.

Taken alone, revenue figures paint a grim picture…

Since March, when online poker totals eclipsed the $3.2 million barrier, monthly revenues have fallen roughly 36 percent.

The partnership of Borgata and Party Poker has suffered the largest monetary losses, dropping from $1.64 million in March to $1.075 in June (-34.5 percent), while the triumvirate of Caesars, WSOP and 888 hasn’t fared much better, generating $525.6k less in June than it did a quarter ago (-35.8 percent).

New Jersey’s last place network, Ultimate Poker, would sustain the most devastating percentage loss, grossing only 30 percent in June of what it did in March, when the network’s poker revenues peaked at just over $100k.

Taken on their own, these figures depict an industry in peril. But when combined with other factors, it becomes apparent that the situation is in fact much brighter than it initially appears.

…but there’s significant cause for optimism

The first indicator that things are on the up-and-up in New Jersey is that revenue percentage losses from May to June were less pronounced than those of the two months prior.

From March to April, New Jersey poker revenues dropped an alarming 19 percent. This was followed by a 12 percent loss in May. Relatively speaking, a 9.92 percent drop isn’t cause for concern.

And when you factor in the catastrophic hit global cash-game volume took during the live WSOP (13.4 percent from late-May to early-July according to PokerFuse Pro via PokerScout), and a mere 10 percent revenue drop almost seems promising.

Speaking of ring game traffic, here’s a quick glance at how New Jersey’s market fared over an equivalent time period (May 25 – July 1):

  • Party Poker NJ: Slips from 148 to 136, an 8 percent drop. Since, the network has made a modest recovery, with volume up 3.7 percent over the past two weeks.
  • WSOP.com: 7-day ring game traffic jumped 13.2 percent from 114 to 129. Currently, the site averages 122 players.
  • AAPN (US.888poker.com): Traffic grew modestly (3.5 percent), although the growth pattern was anything but linear. Case in point, from May 25 to June 5 averages plummeted to 44, only to jump back up to 64 by the 23rd.  Since, 7-day averages have settled in at around 65.
  • Ultimate Poker: UP woeful cash-game averages have hovered between 3 and 4 for the better part of two months. Its tallies are no longer recorded by PokerFuse Pro.

Cash-game averages across all New Jersey networks was up nearly 2 percent in June, vastly outperforming the global market. Compare this to May, when volume in New Jersey fell 15.5 percent, but only dipped 1.3 percent worldwide.

Based on these numbers, it becomes apparent that despite lower monthly revenue totals, New Jersey’s iPoker industry was actually in a healthier state in June than the month prior.

In reality, the 9.92 percent revenue drop from May to June was more a reflection of the staggering losses the market sustained throughout May than it was the industry’s performance in June.

This apparent inconsistency between cash-game volume trends and month-over-month revenue growth illustrates the importance of looking at both factors, with preference arguably given to cash-game trends, before making an overall assessment of the market.

And based on the cash-game trends I’ve seen, there’s significantly more cause for optimism than the industry’s revenue tallies would indicate.

Measuring the impact of the live WSOP on NJ’s iPoker revenue totals

Outside of Nevada, where the state’s online poker industry thrived, the live WSOP likely had a negative impact on online poker volume.

The reason for this is simple: An influx of high-stakes online pros and other Internet grinders were spending their days playing live tournament poker at the Rio. And for every online player that traveled to Vegas for the summer, that was one less player mixing it up at their regular online poker room.

While I can’t mathematically prove that the live WSOP severely impacted New Jersey’s June revenue totals, I did notice on several occasions that the proportion of high-stakes to low-stakes games being spread throughout June was lower than usual. And fewer high-stakes games means less rake for state operators.

Furthermore, higher buy-in tournaments were suddenly having trouble fulfilling their guarantees. One needn’t look further than the dismal performance of the WSOPOC $215 buy-in Main Event to see that.

My theory is that while there was enough new signups in NJ  to offset the number of players leaving the Garden State to play in the WSOP, most of them were casual players, whereas those participating in the WSOP were more likely to be higher stakes pros.

Along the same lines, now that these players are coming back, it’s conceivable that not only traffic, but the average revenue generated per player in New Jersey will rise, leading to elevated revenue totals in July.

- Robert DellaFave is a game designer and avid poker player. He writes for several publications centered on legal US online poker and the regulated online gambling industries in New Jersey and Pennsylvania.
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