Nevada Online Poker Revenues: Stable for Now, But Serious Structural Concerns Remain

According to PokerScout.coms’s Scouting Report, the downward trend for Nevada online poker finally appears to be coming to an end – but it may be months still before the industry observes notable gains.

The revenue figures for December 2014 through February 2015 are based on PokerScout’s internal projections. The Nevada Gaming Control Board stopped releasing revenue figures when Ultimate Poker’s closure dropped the number of sites from three to two (WSOP NV and Real Gaming).

Nevada revenue figures at a glance

PokerScout’s approximations paint a somewhat harrowing picture of Nevada’s online poker industry, one in which the market continued to post month-over-month losses during a time when traffic levels are typically on the rise:

Data: PokerScout.com / Scouting Report

Presuming PokerScout’s estimates are as accurate as they have been in the past (and they have been quite accurate), then Nevada’s iPoker industry has been mired in a state of steady decline since July, when the presence of the live WSOP propelled the Silver State’s online gaming market to its first and only seven-figure revenue tally ($1,037,000).

Here’s a glance at monthly revenue figures since then:

• August: $742,000
• September: $693,000
• October: $665,000
• November: $641,000
• December: $594,000*
• January: $582,000*
• February: $574,000*

*estimated

On a more positive note, it does appear that the rate in which the market is hemorrhaging money has slowed to a near halt, and may even be in the process of reversing.

From January to February, revenue estimates only fell 1%. That slight negative becomes a positive when one breaks revenue down into daily averages.

As per the Scouting Report, daily averages in February were $20,500 versus $18,800 the month prior – a 9% month-over-month increase.

Year over year tells different story

That being said, year-over-year tallies are sharply down.

Last February, which also happens to have been the first month Nevada regulators released revenue figures, the state’s poker rooms generated $824,000. The latest revenue estimates represent an alarming 44% percent year-over-year decline.

As a mode of comparison, New Jersey‘s iPoker market “only” incurred a 28% loss over an equivalent time frame.

While Ultimate Poker’s withdrawal from the market undoubtedly impacted the industry’s bottom line, other factors such as:

• The novelty of regulated online poker wearing off,
• Persistent payment processing issues, and
• Lackluster liquidity

… all likely played contributing roles.

Nevada industry bucks seasonal trends

Given the market’s inability to produce month-over-month revenue gains during the winter and its significant year-over-year falloff, logic dictates that the spring will bring with it even lower revenue tallies.

But the circumstances in Nevada are quite unique.

As per the Scouting Report, “Nevada’s revenue trends defy conventional wisdom, which dictates that winter is generally the strongest season for online poker.”

The reasons stated for this are threefold:

• Cimate:  Cold weather and snow are the predominant factors driving average player counts upward during the winter, but compared to most of mainland Europe and New Jersey, Nevada winters are “rather pleasant.” If anything, it’s the Nevada summers that are oppressive.
• Lack of operators: At present, Nevada poker players only have one real online option, WSOP.com. This will change when 888 and Treasure Island enter the equation, but even then, all three sites will be sharing a common platform.
• The live WSOP: The annual tournament extravaganza is held in early-to-mid summer, and attracts thousands of poker tourists, some of whom play online.

It’s worth noting that this year’s WSOP will feature both a live event expected to draw at least 10,000 runners (the $565 buy-in Colossus), and an online bracelet event.

On the basis of these two new additions alone, it stands to reason that WSOP.com will attract even more traffic this summer than last.

Factor in what will presumably be a tighter, more focused cross-promotional effort between the live Series and the online product, and the sky’s the limit.

Live WSOP not a permanent answer

Still, in reality, the live WSOP is little more than a band-aid solution that will temporarily mask the market’s downward momentum until the final bracelet is awarded.

Then it’s up to the operators themselves to explore long-term solutions, especially with regards to increasing liquidity.

An imminent player pooling compact with Delaware is a promising start, but benefits Delaware players significantly more than their Nevada-based counterparts.

The real elephant in the room is New Jersey, an industry which may have initially scoffed at the notion of entering a liquidity compact with a state featuring a population of less than 3 million, but now faces serious revenue problems of its own (New Jersey poker sites generated just over $2 million in February 2015).

A compact with New Jersey elevates player counts just over the critical mass necessary to sustain a fruitful poker ecology, and will undoubtedly result in higher monthly revenues for both states and bring increased attention to regulated online poker.

Now it’s just a matter of making it happen.

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