The online gambling industry, and online poker in particular, suffers from seasonality. Beginning in the spring, and lasting through the summer months, traffic, and by extension revenues, at online gambling sites dwindles.
New Jersey has not been immune to this phenomenon.
Better weather is one of the main reasons for the seasonal decline, but the World Series of Poker’s ability to attract poker players from around the globe also contributes to online poker traffic numbers dipping.
However, this year New Jersey did manage to stave off the expected decline for an extra month. Instead of April marking the beginning of the seasonal decline it was May, as evidenced in the chart below.
In 2013 and 2014, online gambling revenues increased in January, February, and March, only to start to dip in April. In 2016, April revenues didn’t just rise, they set an all-time record.
A likely reason for this sustained growth was the addition of PokerStars to the market in mid-March.
While online poker traffic historically declines during the summer months, the launch of PokerStars may have given the industry a boost. But even with the addition of PokerStars, New Jersey’s online poker industry has seen average cash game traffic plummet during the past six weeks.
With seasonality catching up to New Jersey, we have to turn to another metric to determine whether the market boost from the March launch of PokerStars is still paying dividends for the industry. That metric is a year-over-year traffic comparison.
The good news is average online poker cash game traffic is still up year-over-year. The bad news is the percentage YoY increase is starting to evaporate.
The chart below illustrates the turn the market has taken from the time just before PokerStars’ soft launch in New Jersey to the end of H1 2016 (data provided by Poker Industry Pro (paywall) via PokerScout.com):
In addition to PokerStars impact on the industry as a whole waning, the numbers are indicative of another troubling trend for the other online poker operators in the New Jersey market.
For the first time, PokerStars’ cash game market share is on the rise. Since its initial launch in mid-March, PokerStars has maintained a 40 percent market share. At the end of June, the company’s market share had ticked up to 45 percent.
Interestingly, it’s 888 and WSOP.com that are losing market share to PokerStars.
One explanation for this loss of cash game traffic is the World Series of Poker, which is currently taking place in Nevada.
Not only have dozens of players from WSOP.com and 888 qualified to play in WSOP events through New Jersey online poker sites, but it’s likely many cash game players have cut down on their own play to participate in WSOP satellite tournaments.
Also of interest, PartyPoker’s and Borgata’s cash game traffic market share has increased, providing yet another trend for analysts to keep an eye on.
Initially, it was 888 and WSOP.com that appeared to have weathered the PokerStars storm, while PartyPoker and Borgata went on a downward trajectory. It’s too early to tell what this data means, but it certainly warrants attention moving forward.
We should have a better idea if cash game traffic from WSOP.com and 888 has indeed been converted to tournament players (which would explain the reversal of fortunes for Party/Borgata and 888/WSOP) during the past four to six weeks, when the Division of Gaming Enforcement releases its monthly online gambling revenue report on July 13.