Most people would expect there to be a significant gap between the revenues generated by New Jersey’s regulated online gambling sites and daily fantasy sports (DFS) sites.
After all, DFS has ties to all major sports leagues, is advertised non-stop on ESPN, is available in 40+ states and is PayPal-friendly.
Meanwhile, NJ’s online casino and poker sites have been beset by poor payment processing, geolocation headaches, low consumer awareness and are only available to players within state borders.
And there is a big revenue gap between the two.
Just not necessarily in the direction you’d expect:
While imperfect for a number of reasons (some of which I’ll discuss below), the comparison is still worth making, largely because it provides relevant context for New Jersey’s performance – context that has been absent so far.
Up until this point, the measuring stick for New Jersey has been populated by various expectations – expectations driven by things like Christie’s budget projections or by the revenue goals of companies like 888 and bwin.party (and the analysts who cover them).
Measured against those expectations, New Jersey has been a disappointment. And that’s by and large been the story told about the market by the media.
But measure New Jersey’s first year of operation, with all of the well-documented hurdles and setbacks, against the performance of DFS, a wagering product that is …
… and it becomes more difficult to label New Jersey as anything but a resounding success (or, alternatively, DFS as a massive failure).
The big problem with comparing DFS and legal online gambling in New Jersey: perceived growth trajectories.
Consensus opinion holds that growth in New Jersey will be tough to come by and ultimately limited by population constraints.
DFS, on the other hand, has nowhere to go but up – way up.
Consider these recent DFS revenue projections from Eilers Research, who are generally in the business of producing sober, rational estimates for gaming revenue:
Trust me, no one is drawing a line to 2020 with the bull case angle for New Jersey. Heck, you’d be hard pressed to find someone arguing that New Jersey could even hit the bear case growth rate for DFS.
So it’s a bit like comparing attendance for two concerts, but counting the crowd for the opening act at one and counting the crowd for the headliner at the other.
Still, I think most casual observers would be surprised to learn that, for 2014 at least, there’s nearly double the money in New Jersey online gambling than the entire DFS industry combined.
*DFS vs NJ revenue chart is based on actual revenue reported by NJ online casinos and poker sites through September, publicly available revenue information from FanDuel through September, projections from Eilers Research and projections from OPR.