NJ online casinos proved viability of live dealer in US market

An Early Look At What Live Dealer Might Look Like For PA Online Casinos

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With online casinos in Pennsylvania set to go live in July, one question is what the situation will be for live dealer games. Will they be present at launch or soon afterwards, or will they be a long time coming?

In New Jersey, nearly three years elapsed between the launch of the first online casinos and the addition of live dealer games, and it was another two years before they became widespread. In Pennsylvania, however, there’s a lot of reason to expect a faster timeline.

The history of live dealer games in NJ

The synchronized launch of online casinos in New Jersey happened in November 2013, but the first to offer live dealer games was Golden Nugget online casino in August 2016. It partnered with Ezugi, which has been offering such games in Europe since 2012, to build a dedicated studio within the brick-and-mortar casino and begin offering the games on its own site.

Betfair online casino, a Golden Nugget licensee, also added the games the following year. Borgata and its licensees Party Casino and PlayMGM followed suit in April 2018.

A few months after that, Evolution Gaming partnered up with the newly opened Hard Rock AC to set up a second live dealer studio at that property. This effectively opened the flood gates for live dealer games, with 888 NJ, Mohegan Sun, Resorts and SugarHouse online casino all striking deals to offer Evolution’s games on their sites.

There are now more New Jersey online casinos offering the live dealer experience than not, but it took five years to get to that point.

Pennsylvania live dealer coming quickly?

It’s likely that the way live dealer games play out in Pennsylvania will be qualitatively similar to how they’ve gone in New Jersey, but with a much quicker rollout. There are a couple of reasons why many if not all online casinos in Pennsylvania will want to get live dealer games up and running quickly. (Parx Casino, for its part, already advertises that it will be a part of its online casino.)

The New Jersey success story is the first and most obvious of these. When Golden Nugget went ahead with its deal with Ezugi, it was entering uncharted territory, at least in the regulated US market. That a dozen other online casinos followed suit within two years shows that it’s now seen as a proven money-maker, so we shouldn’t see the same kind of hesitation in Pennsylvania.

More important, however, is the structure of Pennsylvania’s online gaming taxes.

In New Jersey, online gaming revenues are taxed at a flat rate. Not so in Pennsylvania, where different verticals have different rates.

Crucially, the rate for table games is 16%, while slots will be taxed at an excruciating 54%. In brick and mortar casinos, that’s partially offset by the bigger house edge – 9-10% on average in Pennsylvania and New Jersey, compared to 1-3% for most table games.

Online slots tend to have lower edges – 5% on average in New Jersey and as low as 2.9% in one case – so there’s much less difference between them and the table games, which have the same edge online and off.

Simply not offering slots is likely out of the question due to their popularity, but Pennsylvania operators will be desperate to funnel as many players as possible to the table games rather than the slots. Conventional online table games aren’t as visually stimulating as slots, however, so live dealer play is one way to try to increase engagement.

A tested online casino product

Because things have gone well in New Jersey, the roadmap for Pennsylvania will likely be very similar, just accelerated. It’s likely to be the same companies involved, as well.

Ezugi and Evolution offer fairly similar lineups of games, with a few differences.

  • Both offer the standard trifecta of roulette, blackjack and baccarat.
  • Both also offer Casino Hold’em, while Evolution holds the edge in variety, adding Ultimate Texas Hold’em and 3 Card Poker.
  • Ezugi offers a more generous blackjack rule set however, and also has an “Over the Top” roulette table where online players can bet alongside actual patrons on the casino floor, benefitting from a single-zero wheel in the process.

If it were possible, these companies would probably want to save themselves and their partners money by running games for Pennsylvania sites out of the same studios they already have set up. Unfortunately, the recent DOJ opinion on the Wire Act may have made that difficult. (That opinion is the subject of an ongoing federal court case.)

Ezugi and Evolution will therefore likely need to find room to set up new studios at casinos in Pennsylvania.

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Who’s partnering with whom for PA live dealer?

There’s no word at this time about which casinos might be considered for live dealer studios, but it’s possible to engage in some speculation based on how things have played out in New Jersey. Specifically, there are a couple odd pairings in that state that might foreshadow things to come in Pennsylvania.

Sugarhouse is one of Pennsylvania’s largest casinos, and operates an online site in New Jersey in affiliation with Golden Nugget. What’s interesting here is that although Golden Nugget is home to Ezugi’s studio, Sugarhouse waited until Evolution established its studio in order to partner with them.

It should be noted, however, that Evolution acquired Ezugi in January this year. The two studios have continued to carry out operations independently in New Jersey, but the acquisition may mean that the plan is to consolidate operations in a single, larger studio in Pennsylvania.

A somewhat opposite scenario is going on with Party Casino and Ezugi. Party dealt with Evolution for live dealer games for its international site as early as 2007, yet jumped on board with Ezugi in New Jersey just months before Evolution’s studio began operating. Party is widely expected to be partnering up with Valley Forge Casino in Pennsylvania, so that might be where Ezugi is headed.

That speculation aside, we can’t rule out Parx as an option for either company simply due to its size and importance.

The Live! Hotel and Casino is another interesting option. It’s still under development and won’t open until next year, so going that route would mean a delayed roll-out; by the same token, however, space could be custom built for the express purpose of having a live dealer studio, avoiding the need to repurpose existing space. In particular, if either Ezugi or Evolution wanted a larger studio than they have in New Jersey, with more tables and more games, building a dedicated space from scratch might be worth the trade-off of coming to market a bit later.

- Alex is a journalist from Dartmouth, Nova Scotia, Canada. Now site runner for Online Poker Report, he has been writing about poker and the online gambling industry in various capacities since 2014.
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