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Based on the experiences of the New Jersey operators, the cannibalization concerns being raised in Pennsylvania are wholly misplaced.
Caesars has never feared cannibalization.
In 2013, Mitch Garber, who ran Caesars Interactive, told CNBC, “It’s been proved for a long time, in the UK and Australia, that online gaming does not cannibalize offline gaming.”
During a Pennsylvania online gaming hearing in March, Caesars SVP of Government Relations David Satz confirmed 80 percent of the customers who signed up at Caesars’ New Jersey online gambling sites were not in the company’s land-based casino database.
Satz said that of the 20 percent who were known customers, 42 percent were inactive for at least 12 months. This amounts to 88 percent of Caesars’ online gaming customers being new or previously inactive players.
What makes this number even more impressive is that the Caesars Total Rewards database contains 45 million names.
At the same 2017 hearing, Golden Nugget submitted testimony stating 89 percent of online sign-ups were not existing customers in its database. According to testimony, only eight percent were active at the Golden Nugget in Atlantic City in the 12 months prior to creating their online gaming accounts.
In total, new and inactive customers account for a whopping 92 percent of Golden Nugget’s online customers in New Jersey.
Furthermore, the eight percent of active customers who signed up online increased spending at the land-based casino by 15 percent.
This month, a Resorts spokesperson told Online Poker Report that 75 percent of its online registrants were not in the Resorts Casino database prior to signing up for online accounts. Resorts didn’t say what percentage of existing customers were inactive before registering.
As is the case with Golden Nugget and Tropicana, the Resorts representative said the casino hasn’t seen any decrease in visitation or spend from existing customers who register, despite turning to its land-based database as a recruiting tool for online.
“In the earlier days from launch the bricks and mortar database was a key recruiting ground for the online business and it still remains an important part of the marketing mix,” said the Resorts representative.
Luisa Woods, the vice president of online and internet marketing at Tropicana Entertainment, recently told Michael Pollock, the managing director of Spectrum Gaming Group, that roughly 60 percent of Tropicana’s online players were new players.
This is a lower percentage than its competitors. But Woods said that a further 20 percent of Tropicana’s online customers were inactive over the previous 12 months. This brings the number of new or inactive players up to 80 percent.
And what about the 20 percent of online customers who were active customers at Tropicana AC? Woods told Pollock, “Not only was their online spend completely incremental, but they also grew their land-based spend.”
In the months following its launch, Borgata executives revealed that about 85 percent of online registrations were either new to its database or had been inactive land-based customers for at least two years.
“Online gaming is growing our database,” stated Boyd Gaming President and CEO Keith Smith in a February 2014 earnings call. Smith remarked that online gaming was “creating a long-term opportunity to market Borgata to an entirely new group of customers.”
Borgata hasn’t updated these numbers since Smith’s 2014 comments. But its early results lined up closely with Caesars’.
There’s no reason to think the two gaming behemoths have diverged since. Nor is there any indication that Borgata is now an outlier in the New Jersey online gaming market.