How Have The Fortunes Of NJ Online Poker Sites Changed In The Past Two Years?

Since launching two years ago this Thursday, the New Jersey online poker industry has undergone a host of positive changes, ranging from improvements in the areas of geolocation and payment processing, to software upgrades and tournament schedule revamps.

It’s also experienced its fair share of hiccups, namely by way of player attrition, falling revenue and the occasional server meltdown.

Yet, one aspect of the market that hasn’t significantly changed is the percentage market share owned by the state’s two predominant online poker operators – the Borgata (Party/Borgata) and Caesars (WSOP/888) – who are as competitive with one another now as they were in early 2014.

A snapshot of NJ online poker market share

We notice that since the Borgata’s blistering start in December 2013, the race for market supremacy has been hotly contested (see chart below).

Although there hasn’t been a single month where Caesars reaped more online poker revenue than the Borgata, the latter’s margin of victory has never exceeded 13.7 percent (May 2015), and has only reached double digits in five out of the past 22 months.

In total, the Borgata has generated 53.9 percent of total industry revenue, compared to Caesars’ 45.1 percent. The defunct Ultimate Poker accounts for the remaining 1.1 percent.

Promotions, tournament events have minimal impact

Thus far, online poker promotions, tournament series and brick and mortar tie-in events in NJ have not resulted in any one operator gaining or losing significant traction.

That being said, there have been a few select events that have moved the needle, albeit modestly and temporarily:

• Borgata’s market share lead shrank from 9.4 percent to 3.1 percent from January to February 2014, primarily due to 888’s 80 percent rakeback offer. However, by the time the offer ended in May 2014, the Borgata’s lead crept back up to 9.2 percent.
• The first running of the Party/Borgata Garden State Super Series and its cross-promotional ties to the live Borgata Poker Open resulted in moderate market share gains for Party/Borgata, up from 51.9 percent in August 2014 to 55.8 percent the following month.
• Subsequent Party/Borgata MTT series’ in January, April and October 2015 also led to marked gains, with the most recent (October’s GSSS III) pushing the network’s lead to 12.8 percent, its largest since May.
• As expected, WSOP/888’s market share tends to increase somewhat during the live running of the WSOP in Las Vegas. This June brought with it the largest shift, when WSOP increased its market share from 43.1 percent to 48.2 percent, month-on-month.

The one event that was expected to shake up the industry but didn’t was the partial shared liquidity agreement between 888 and WSOP.com.

Since the agreement was forged in January, the network’s market share is slightly less (0.4 percent) than the combined share of 888 and WSOP.com in the four months prior.

One possible justification is that the newly-forged network consolidated a significant portion of its tournament schedule, resulting in increased average turnouts but fewer tournaments.

Also, 888 largely abandoned its promotional efforts once the agreement went live, instead defaulting to WSOP to do most of the heavy lifting. This is beginning to change, and the network’s market share appears to have benefited modestly because of it.

Market share not tied to cash game liquidity

Interestingly, since January 2014 the duo of WSOP.com and 888 have brought in more cash game customers than Party/Borgata – at times appreciably more.

Even when Party/Borgata’s lead was at its largest in May through June, WSOP/888 averaged upwards of 55 percent more cash game liquidity, as per data collected from Poker Industry Pro via PokerScout.com.

So why the glaring disparity between revenue and cash game liquidity? A couple theories:

• Grinders play higher on Party/Borgata: There are noticeably more $1/$2+ players on the network than on WSOP/888, where the most populated stake by far is $.25/$.50. Poker operators generate more raw rake per hand at higher stakes.
• Higher rake cap: The rake cap at select stakes is higher on Party/Borgata than on WSOP/888. As an example, 6-Max $.25/$.50 is capped at $2.75 on WSOP.com and $3.00 on PartyPoker. Those quarters add up.
• Bigger MTT series: Party/Borgata is prone to host tournament series featuring total guarantees in the $800k – $1 million range. We just don’t see that on WSOP/888.
• Tournament structures: While both networks offer similar guarantees for their weekday majors, the entry fees on WSOP/888 are generally much smaller, as the network live and dies by the rebuy and add-on format. Conversely, most Party/Borgata tournaments are big buy-in freezeouts or re-entries, resulting in fewer runners, but much greater site revenue per player.

Future outlook

In the absence of any major shakeups ahead of PokerStars‘ launch in NJ, there’s little reason to suspect that market share distribution will change dramatically over the next several months.

However, once PokerStars enters the equation, it’s assumed the online poker behemoth will siphon significant share away from its competitors, and will likely emerge as the market share leader.

In lieu of recently announced cutbacks to its renowned VIP Club program, I don’t expect PokerStars’ lead to be as big as I had initially, but it’s still difficult to deny PokerStars’ marketing pull and the advantages in software and customer service that the operator will hold over its competition.