Online Poker Report

Measuring the Cannibalization Effect of Live Tournaments on NJ Online Traffic

NJ Online Poker Cannibalization
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In June, Nevada’s online poker economy received a much needed lift from the presence of the live WSOP and the influx of cross-promotional events that came with it.

A similar phenomenon occurred in New Jersey back in April, when the NJCOP and its ties to the WPT Championship facilitated a minor surge of cash-game liquidity on Party / Borgata.

Which raises the question, “If New Jersey or Nevada online liquidity benefits from a live tournament series held within the same state, wouldn’t the kickoff of a major live event hosted in a neighboring state have the opposite effect?”

As we’ll soon find, the answer is yes, at least in New Jersey.

Differences between New Jersey and Nevada poker markets provide clues

When comparing the United States’ two most lucrative poker markets, several key differences become apparent:

Taken together, these factors indicate that New Jersey’s iPoker market should be significantly larger than that of its rival out West, yet the latest figures from PokerFuse Pro via PokerScout paint a decidedly different portrait.

To illustrate, 7-day rolling cash-game averages across all NJ sites are only approximately double that of Nevada’s, when based purely on population reach they should be approaching quadruple.

Also of note, due to Nevada’s sheer geographic size and the strict anti-gambling positions of some of its closest neighbors, its residents are less prone to enter out-of-state poker tournaments on a whim, as even the Commerce and Bicycle card rooms in California are at least a good 4 or 5 hour drive away.

That same obstacle doesn’t exist in New Jersey, where both the Sands and Parx Casino are less than a 90 minute hike from New Jersey’s most densely populated areas.

Even Foxwoods is within striking distance of the northern NJ. This accounts for one of the primary reasons why Atlantic City’s casino industry is mired in a multi-year slump that may force an additional three casinos to shutter by year’s end.

To sum up, New Jersey’s online poker market is grossly underperforming in relation to Nevada’s and its live poker industry is far more susceptible to cannibalization from casinos in nearby states – leading me to believe that the Garden State’s online poker industry has suffered the same ill-effects endured by Atlantic City.

A case study: Parx Casino

Parx Casino hosts a quarterly series of deep stack tournament events (Big Stax) that draw players from all over the Philadelphia area.

Given that they’re arguably the most attractive series held on the East Coast outside of the Borgata Poker Open, Big Stax serve as a suitable starting point for a test study to measure the potential effects of cannibalization on NJ’s iPoker market.

Since online poker went live in NJ back in November, the Big Stax has been held three times (Big Stax VII is currently in progress).

Accounting for the rolling nature of PokerScout’s calculated traffic averages, volume on NJ poker rooms during the opening event of the series versus one week prior (in parenthesis) are as follows.

Big Stax V (February 20 – March 10)

Notice that each NJ site experienced an approximately 12 percent drop-off during our sample time frame.

Conversely, the global market fell a rather insignificant 0.7 percent over an equivalent period. Traffic on Nevada’s poker rooms fell 1.6 percent.

To reinforce the data, I looked at major tournament turnouts for the weekend ending February 16 vs. February 23 (parenthesis):

  • PartyPoker $50k Guaranteed: 329 (303)
  • WSOP $25k Guaranteed: 135 (151)
  • Ultimate Poker $20k Guaranteed: 126 (190)
  • 888poker $10 Guaranteed: 47 (53)

Here’s where a discrepancy occurred.

Despite cash-game volume trickling off, tournament volume was on the rise. Granted, promotions like Ultimate Poker’s NO-verlay certainly influenced the numbers, but even if they’re disregarded, week-over-week major tournament volume exhibited mild fortitude.

Big Stax VI (May 1 – May 18)

  • PartyPoker NJ: 153 (171)
  • WSOP.com: 129 (124)
  • AAPN (us.888poker.com): 64 (81)
  • Total: 347 (376)

Another 7.7 percent loss, made even more alarming by the fact that during the same time, both international markets and Nevada experienced nominal traffic gains.

Granted, other variables likely contributed to the mass exodus, including the end of 888’s lucrative 80% Rakeback promo. But that hardly explains why Party / Borgata ate a more than 10 percent loss.

Online major turnouts for the April 13 and May 4 (parenthesis):

  • PartyPoker $50k Guaranteed*: 280 (300)
  • WSOP $25k Guaranteed: 117 (117)
  • Ultimate Poker $20k Guaranteed: 107 (100)
  • 888poker $10 Guaranteed: 43 (50)

*Note that April 13 was chosen as opposed to the 20th or 27th due to NJCOP events running during those days.

Same story: cash liquidity was down, tournament turnouts were slightly up.

To confirm that the sharp cash liquidity drop-offs that occurred during Big Stax V and VI, we examine the average week-over-week growth of the market over a 16-week period beginning in early February and ending in late May.

On February 7, volume was at 549 – close to its all-time high.

By May 31, the market’s early triumphs had become distant memories, as cash-game volume plummeted to 318. Despite that equating to a staggering 42.1 percent total loss, the market on average would only cede 2.6 percent volume per week – significantly less than it did around the time of the Big Stax.

But didn’t cash-game liquidity in New Jersey rise during the WSOP?

Yes, but the scenarios are hardly relatable, for the following:

  • By my account, significantly fewer NJ grinders played in the WSOP than the closer and more affordable Big Stax.
  • WSOP’s cross-promotional efforts in Nevada spread regulated online poker awareness in both Nevada and New Jersey.

Conclusions

While it’s impossible to make firm conclusions based on only two test cases, the numbers indicate that out-of-state tournament series in neighboring states have a profound cannibalization effect on online cash-game liquidity in NJ.

Further supporting this theory is the fact that liquidity outperformed its 16-week average immediately after the Big Stax tournaments concluded.

Why tournament turnouts held par is a bit more difficult question to answer, although based on my talks with local players, a fair amount were in what they refer to as “tournament mode” – meaning that if they busted out of a live tournament, they would immediately head home and play online MTTs.

It’s also plausible that non-NJ residents shacked up in the Garden State for the duration of the Big Stax for equivalent reasons.

With Big Stax VII currently underway, it will be interesting to see if the global market outperforms New Jersey over the next two weeks. Should it, then it reaffirms the theory that while the live casino industry in New Jersey has no cannibalization effect on NJ iPoker traffic, the live poker market in Pennsylvania certainly does.

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Robert DellaFave
- 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.