Online Gambling Revenue Continues to Drop for NJ Casinos
Online gambling was supposed to provide a financial boost to New Jersey's ailing casinos, but revenue has fallen for the third month in a row and Fitch Ratings, a Wall Street credit rating firm, has cut its projection for Internet gambling this year by almost half.
So why isn't Internet gambling thriving?
According to Israel Posner, the executive director of the Lloyd D. Levenson Institute of Gaming, Hospitality and Tourism at Richard Stockton College, online gaming, such as poker, faces a number of obstacles and difficulties.
"For poker, unless there are a critical mass of players at the time you get online that want to play the game you want to play, for the stakes you want to wager - it's not going to work," Posner said.
In addition, he said the mechanics of being able to play are cumbersome because players have to provide a lot of personal information to register.
"They'll ask you for your social security number, and then you've got to fund your account - so now I want your bank account," Posner said. "The question really is, how do you feel when someone asks for your social security number to verify who you are, and also asks for a credit card because you've got to fund your account?"
Posner said online gambling also lacks a level of excitement.
"When you're in a casino, there's lots of noise, lights and excitement, but if you're playing that same game on your mobile device it doesn't quite have the magic that it has in a live context," Posner said.
However, he stressed that rather than looking to online gambling as a significant revenue generator for Atlantic City, it's important to understand that the system is a way for casinos to expand their database.
Research indicates the people who play online are mostly new customers that represent an incremental business, according to Posner. "While the Internet poker winnings have been dropping, once you understand it's a way for the casinos to attract new customers, you then understand that the real value of that expansion of the database is the lifetime value of the customer."
Posner said it's unlikely online gambling will be a "panacea" for casinos, and that it's probably representing 3 to 4 percent of overall gaming revenue.