While New Jersey has definitely had their issues in the gambling industry - specifically, with a number of hotel and casino facilities closing in Atlantic City in recent years - it looked like the online casinos were able to pick up some of the slack. Last year, the online casinos had a huge year in terms of their profits but experts are saying to temper expectations. 2017 could be a slow year for online gaming and the numbers are not expected to approach last year's big wins.
In 2016, the revenues for the state were $196.7 million, which means there was a 32% growth year-over-year. However, it doesn't seem like there is much more room to grow for the operators - at least right now. Take a look at poker, for example. The state estimates that there are roughly seven million adults who are likely to play online poker but most of them are already playing. It's one of the biggest games for online operators, so if they're already playing, who else is there to join? As a result, it has been estimated that the revenues are going to decrease 17% in 2017, which means they'll be still bringing in money but just not at the eye-popping numbers of 2016.
There is also a law in New Jersey that says the only players that can play at their online casinos are those that live within New Jersey state lines, which hurts their chances of getting new players anymore. However, it has been suggested that New Jersey enter into an agreement with Nevada and Delaware, who also allow players to bet at online casinos, so that the three can basically form an online poker network of players. Nevada and Delaware already have an agreement in place between the two, so it couldn't hurt New Jersey to speak to them; that would feasibly mean more revenue for everyone.
That could work as Nevada and Delaware aren't doing so great themselves. But the major shift in the industry could come from two places that aren't even in the online casino game, but are looking at possibly joining. New York and Pennsylvania have started examining the idea of getting into online casinos. They are neighbors to New Jersey and the trio of states could partner to make one large virtual casino or to team up for a sizable poker network. We're still a long way away from that but those discussions are already being had.
For New Jersey, the slow in online gambling revenue for 2017 is significant. Remember that online gambling is taxed higher in New Jersey than land-based casinos. Online gambling is taxed at 15% while land-based casinos are taxed at 8%, so there is incentive for the state to get more traffic online. Those taxes are earmarked for schools and programs for the elderly and disabled, so that money has become quite important.
Keep a close eye on what happens in New York and Pennsylvania because it doesn't look like online casinos are on the cusp of making a breakthrough. While that news may not be ideal for the land-based venues, more options are always better from the customer's perspective.