The hope is that by the end of the year Pennsylvania will become the fourth state with legal online gambling, in the wake of legislation passed in October.
The Keystone State has a terrific model to follow, thanks to its eastern neighbor. But wholesale adoption of the New Jersey model isn’t in Pennsylvania’s best interest.
Online gambling isn’t a one-size-fits-all industry, and even though the two states’ casino markets have a lot in common, they also differ in one very important way: how tightly bunched their casinos are.
Las Vegas is the ultimate gaming outlier. Starting at Mandalay Bay and going to the Stratosphere, there are some 30 casinos on the Las Vegas Strip, and over 40 in the general area.
On the other hand, Pennsylvania, like most states, has spread its casinos out. Not only does that lessen the level of competition between some casinos, it also changes the way casinos will have to approach online gaming.
Atlantic City is similarly configured to Las Vegas, just on a much smaller scale. New Jersey limits casino gaming to Atlantic City, and four (soon to be six) of the city’s casinos can be found on the Boardwalk, and another three just a few miles away in the Marina District.
Considering there are casinos in Pennsylvania as much as six hours away from one another, Online operators will need to take geography into account.
Unless you can’t wait ten minutes before you start gambling, no New Jersey casino possesses a geographical advantage over another.
No one embarking on the two-plus hour car ride from New York City to Atlantic City is going to choose Resorts over Golden Nugget simply because it takes a few more seconds to get there.
However, geography is likely to come into play if that same person is travelling to Pennsylvania to gambling.
Because of the distance between casinos, anyone coming from New York City is more likely to choose between Parx Casino or Sands Bethlehem (both are roughly an hour and a half drive) over Harrah’s Philadelphia (just over two hours) or Hollywood Casino (closer to three hours away).
Online gambling operators would do well to understand this dynamic.
Even though online is ubiquitous, and most online players aren’t land-based customers, the 25 percent-plus of people that will play online and at a land-based casino (the most desirable customer) are more likely to be loyal to the casinos that are closest to them.
There are two reasons for this:
As such, Pennsylvania online casinos are more likely to attract the high-value players that are geographically close to the land-based casino.
That phenomenon could help explain the success of the PlaySugarHouse online casino in New Jersey.
A late entry into the market, PlaySugarHouse is accounting for 15 to 20 percent of Golden Nugget’s online revenue, which works out to somewhere in the $1.2 to $1.5 million range. That makes it one of the most successful skins in the market.
With its online rewards linked to its land-based Philadelphia casino, SugarHouse is likely pulling a disproportionate number of players from western and northern New Jersey.
These players live much closer to Philadelphia than Atlantic City.
Driving from Camden to Philadelphia takes about 20 minutes, whereas driving from Camden to Atlantic City takes well over an hour.
Driving from Trenton to Philadelphia takes about an hour, and going from Trenton to Atlantic City will tack on at least 30 minutes to your drive time.
The bottom line: Geography will play a much larger factor in Pennsylvania’s online gambling market than it has in New Jersey.