Poor Advertising and Technical Glitches to Blame for NJ Online Gambling Underperformance

New Jersey online gambling industry is far from reaching its revenue projections, but is feeling optimistic.

New Jersey online gambling industry failed to reach the projected figures outlined when it was first legalized in 2013. The newly opened online casinos in the United States
and other online gaming ventures generated just shy of $30 million between November and March.

However, the industry is not grieving and is looking optimistically into the future after rethinking the strategy and trying out new things. Online gambling establishments have heavily increased advertising, putting their “faces” all over the state. Previous mistakes and glitches, especially the payment problems are being addressed and solved.

Mobile apps for smartphones are being introduced in hope people would prefer spending some time at mobile casinos in the USA, instead of just wasting time during commute.

Why the sudden push?

The unusually aggressive approach to marketing and advertising comes in the wake of disappointing start of the online industry after American gambling laws have been changed to allow it in New Jersey. Experts, analysts, and of course casino bosses expected the online gambling to take off like hot cakes in the state.

Borgata Hotel Casino and Spa is the biggest online gambling enterprise in the state, not to mention a pretty large land-based player as well. Their president, Tom Ballance, had the following comments: “We think it’s going to take time for the online market to grow. This is a business that hasn’t been legal, and a lot of people don’t know it’s legal.”

The projections

The $1 billion revenue mark, Governor Chris Christie once said the New Jersey online gaming industry can generate by July. Well the hot summer month is pretty close, and the industry has only been able to make just under $30 million.

New Jersey online gambling industry underperforming

• $30 million in revenues instead of $1 billion projected

• Weak and insufficient ads and technical glitches to blame

• Steps taken by the operators of online casinos in the USA to remedy the situation

Governor Christie was not the only one projecting much bigger figures. Moody’s Investor Service put the New Jersey online industry’s revenue between $250 and $500 million in the first year, but have already said they will reduce the projections now.

Naturally, the Governor has already been addressed about his $1 billion figure. His spokesman referred to Andrew Sidamon-Eristoff, the state treasurer, remarks when asked about the early projections.

The treasurer had the following to say: “We had expected that the introduction of Internet-based casino gambling would help lift overall gambling activity in Atlantic City and all related revenues. Clearly, the results so far have not met our expectations.”

New Jersey Casino Revenue Fund forecast was decreased by $126 million by the treasurer last week. Of course this decrease has put a dent in the state’s budget projections as well. The initial figure was supposed to reach $180 million during the first fiscal year.

According to the legislative budget and finance officer, David Rosen, the state has only gotten around $4 million in online gambling taxes since the start of the operations in November. But he said the number is likely to triple before the fiscal year is out.

Who’s to blame?

Some experts say that not enough advertising has caused the industry to underperform. According to Ray Lesniak, a known proponent of the legalization, the ads for the online gambling sites were insufficient and poorly done.

He said: “You have someone out there in a boat fishing and trying to gamble, or someone toasting marshmallows around a fire and gambling. They just don’t strike the right tone.” But he also went on to opine that the companies will improve marketing eventually.

And already casino operators have increased the number of ads for online business. Robert Shore, Union Gaming Group analyst, said: “They’re being aggressive now,” when speaking about New Jersey online gambling operators.

Other problems

The new industry kicked off not without some trouble. Lots of operators were reporting technical problems, especially when it came to finding the right payment processors. It was difficult to partner up with the banks, since not many of them accept online gambling transactions. Borgata, for one, has ventured into selling prepaid cards for the purpose of gaming online.

Geo targeting has also posed a couple of problems with some glitches and freezes. The law requires online gamblers to be located in the state in order to gamble. One of online players has shared his experience: “At first, you would log on and it would say you were outside New Jersey even though you weren’t. You would get kicked off in the middle of playing.”

The technological part has been improved greatly, with Borgata’s exec reporting that the failure rate is now around 7% instead of 20% at the start.

Online gambling operators in the state are starting to see promising signs. Recent review carried out by Borgata itself, revealed 85% of online customers haven’t been to any land-based outlet in years, but chose to gamble online. The same report said there are lots of players from northern parts of the state, far from Atlantic City itself.

A Caesars Interactive (second biggest online player in NJ) executive commented: “We’re in the first inning of a nine-inning game, and we need time to let the technology bugs get fixed. We’re all going to get a lot more active and spend more money and spend it wisely.”

In case partnerships with other states, allowing to expand online gambling offerings, succeed, the industry will certainly take off. However, there are some new legislative challenges, the recent proposal to once again ban online gambling received great support from Sheldon Adelson – a land-based casino tycoon.

Adelson will probably be the biggest donor in the 2016 primaries, and his desire to stop online gambling in the country will most probably be reflected in the government’s policies, should the Republicans win the primaries.

Mr. Christie’s spokesman said the Governor had no comment on the new legislation. And Borgata’s Mr. Ballance is also calm, well on the outside that is, he said: “If you worry about those issues in this business, you’ll do nothing but worry.”