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There have also been plenty of surprises over the course of 2016, some bigger and more impactful than others:
But none of these were the biggest surprise of the year, at least in my opinion.
In this retrospective, I’ll take a look at what I consider that surprise to be, and also recount the biggest surprises from 2014 and 2015, both of which are still having a significant impact on the industry.
One of the great unknowns when New Jersey online casinos and poker rooms went live in November of 2013 was how all of the different brands would coexist.
Not only was there going to be robust competition between the different casinos, there was also intra-platform and intra-network competition, as multiple operators launched with several different brands under their umbrella.
There was a bit more competition in Delaware, where each racino had its own branded site. But only land-based brands were present.
In New Jersey, friend and foe were harder to differentiate. Several casinos decided to launch a site with their own brand as well as a site with the brand of their online gaming partner.
What became immediately clear was New Jersey online gamblers were far more likely to sign up at the sites that boasted the familiar land-based casino brands.
[geoip2 region=NJarea][i15-table tableid=29874][/geoip2]
The attraction to land-based casino brands was likely for several reasons:
Little has changed on this front in the ensuing years, as land-based brands continue to dominate. But the gap is showing signs of narrowing.
According to Eilers & Krejcik Gaming, the recently launched PokerStars casino is responsible for about $150,000 – $275,000 of Resorts‘ $2 – $2.5 million monthly online casino revenue. That’s a pretty solid share considering PokerStars’ nascence in the market, and casino products in general.
An even newer entry, Play SugarHouse, has a smaller, but still significant share of Golden Nugget’s near $4 million monthly online casino revenue. Eilers & Krejcik estimates SugarHouse’s share in the $100,000 – $150,000 range.
Worth noting, is that Betfair Casino also operates under Golden nugget’s license and has a significantly larger market share than SugarHouse, but less than Golden Nugget.
There are likely a few reasons for increased popularity of international brand:
The biggest surprise in Year 2 was the sustained rise of online casino revenue.
When online gambling first launched in New Jersey online poker sites accounted for a significant portion of total online revenue.
Month after month the divide kept growing as online poker revenue fell and online casino revenue rose. By the end of 2014 online casino revenue was accounting for roughly 80 percent of all online gambling revenue.
Remarkably, even though online poker’s decline leveled off at around $2 million per month by mid-2014, 20 percent wasn’t the floor for online poker, as online casino revenue kept growing.
In November 2016 online casino revenue now accounts for 88 percent of total gambling revenue in New Jersey ($15 million to $2 million).
The year-over-year growth of online casino is showing no signs of slowing down anytime soon. Eilers & Krejcik believes under current market conditions the ceiling for online casino revenue could be just shy of $20 million per month.
After a two-plus year licensing process that left poker players clambering for its return, PokerStars was finally given the go-ahead by the New Jersey Division of Gaming Enforcement in September 2015.
But it would be six more months before PokerStars launched its New Jersey online poker and casino sites.
When PokerStars New Jersey did launch in March 2016 it quickly raced out to a plurality of market share. More importantly it also grew the total market.
Total online poker cash game traffic jumped 20 percent immediately after the site went live, and monthly poker revenue saw a 25 percent increase that lasted for a period of three months.
But like the first few months following the initial launch back in November 2013, the impact of PokerStars quickly subsided.
The PokerStars’ spike is easy to see in the chart below.
PokerStars market share hasn’t seen the same drop-off.
Stars still has a plurality of the market share (40 percent, with 888 and partypoker at 30 percent each). Furthermore, PokerStars seems to be slowly trending towards a majority market share.
All that said, PokerStars hasn’t been as impactful for the market as a whole as many people predicted.
The most likely reason for its ineffectiveness at growing the market are the handcuffs the New Jersey market presents for online poker operators.
At the top of the list is liquidity. With a population of nine million, the NJ market is simply too small for operators to thrive.
The nature of the market is also problematic. There are the stringent regulations, not to mention that in order to canvas the entire state operators would have to advertise in two of the most expensive TV markets in the country, the New York and Philadelphia markets.
As I noted earlier this year, online poker players are going to have to get used to these smaller online poker markets, although the early returns in Portugal would indicate there is some room to grow if market conditions change.