Feature: On the right track

Online gaming revenues were up 21% year-on-year in New Jersey in 2015. Martyn Hannah looks at which operators performed best and who still has work to do

All things considered, 2015 was a successful year for online gaming in New Jersey. Total gross gaming revenue (GGR) increased 21% YoY to $148.8m driven by a 33% surge in online casino revenues to $125m. Operators and suppliers continued to invest in product and marketing, with new brands entering the fray. But while casino was a success story, poker was a tale of woe with GGR down 18% to just $23.8m. However the impending launch of PokerStars and Full Tilt, and the expectation they could double the size of the poker market, is allaying concerns for the time being. [private]

In terms of individual operators, some have capitalized on growth better than others. And while GGR is not representative of whether a site is turning a profit, breaking even, or haemorrhaging cash, it is a good indicator of performance and where exactly customers are choosing to play. Below we take a closer look at each individual operator, how they fared last year, and their plans for the coming months. One thing’s for sure, they should all be commended for remaining committed to what is still a tough and unforgiving market.

Golden Nugget

GoldenNuggetCasino.com/ BetfairCasino.com

Golden Nugget enjoyed the largest YoY GGR gains in 2015, with revenues increasing a mighty 185% to $31m as it continues to do battle with fierce rival Tropicana. A key driver of success over the past 12 months has been a fast-moving conveyor belt of new games, with GoldenNuggetCasino now offering a market-leading number of desktop titles (270) and mobile games (85) – around 100 more than most of its competitors.

Having ditched plans for poker early on, focusing solely on casino is paying dividends. GGR is boosted by contributions from BetfairCasino, which uses the Golden Nugget’s interactive wagering permit to run its site in the Garden State. And while the operator will not break out Betfair’s percentage of total revenues, Golden Nugget’s head of online gaming Thomas Winter says both brands grew more than twice as fast as the market in 2015.

“The reason we were able to achieve such growth was because we kept investing in our product through the regular addition of new games and new features. We have also kept our marketing investments unchanged compared with 2014, while others have scaled back. We migrated to a new platform and launched a brand new site and mobile apps in December, so the impact will continue to show in 2016.”

Indeed, Golden Nugget’s biggest challenge in the coming months is to continue its impressive form of late. But Winter is bullish and says Golden Nugget has yet to fully extract the potential of its NYX Gaming platform, with new features and even more games in the pipeline. The operator also has plans to enter the social casino sector in the coming months, and hasn’t ruled out eventually launching a poker product.

“We don’t have any short term plans for poker but are open to joining an existing network if there is an opportunity,” he says. “We see the online casino market growing another 20% in 2016 and we think we can do better than that. Golden Nugget generated $31m in GGR last year, only 6% below casino market leader Tropicana. That’s already very close, so for us the battle is well and truly on,” Winter adds.

Tropicana

TropicanaCasino.com/ VirginCasino.com 

While Golden Nugget boasted the highest GGR increase in 2015, Tropicana led the way in terms of casino revenues, which were up 45% YoY to $32.8m. Tropicana has undoubtedly made good use of its trusted land-based brand, but has done more than others when it comes to innovation. The Trop was among the first to launch a social casino app – TropWorld Casino –, integrate its online and land-based rewards schemes, and to bring an online bingo game to market.

“We’re very pleased with the growth we were able to achieve this year, and we really credit it to multiple factors,” says Luisa Woods, Tropicana’s VP of online and integrated marketing. “We believe that TropicanaCasino.com is the best online casino product in the market. The metagame features, social features and promotional programs we have in place combine to create an exciting online gaming destination. Plus we offer many games that players can’t find anywhere else,” she adds.

In particular, Tropicana and platform partner Gamesys were the first to market with a bingo-style game, launching 90 Ball Bingo back in March last year. Although bingo games are illegal under New Jersey gambling law, Gamesys worked with the Division of Gaming Enforcement to ensure the game met the regulator’s strict requirements. As well as offering a real-money version, Tropicana also launched a dedicated free to play site – free90ballbingo.com – in a bid to target new customers.

“We have been able to attract players that are not drawn to traditional casino-style games and get them engaged with both Tropicana and with each other through our chat room features,” Woods says. “We deliberately created a new website so that we could highlight a different gaming experience where players can play and get a chance to win without having to place a wager. It’s a fun alternative that’s interactive and has broad appeal,” she adds.

Next on Tropicana’s agenda is live casino. But with a number of other operators believed to have a live dealer offering in the pipeline, it will have to move fast if it wants to continue to lead the charge when it comes to innovation.

“We definitely believe that there is a segment of the market that will delay trying online gaming until they can see a live person dealing cards or placing the ball on the roulette wheel,” says Woods. “We’re very interested in live casino gaming, and we are continuing our search for the right partner that offers the right gaming experience for our patrons.”

Borgata

BorgataPoker.com/ BorgataCasino.com/ partypoker.com/ partycasino.com/ PalaCasino.com

Despite being the clear market leader, the Borgata made less progress than some of its rivals in terms of GGR, which increased just 3.1% to $45.7m in 2015. Casino performed relatively well, with revenues rising from $29m in 2014 to $32.6m due to the roll-out of new games and overall brand awareness increasing, driven by a more refined marketing strategy.

But the uptick in casino was only just able to stave off a 12% drop in online poker revenues to $13.1m as the sector’s health continues to decline in the Garden State. The operator, however, doesn’t believe the poker vertical is struggling, rather the market is maturing and stabilizing now the initial advertising blitz and pre-launch hype has settled down.

Joe Lupo, SVP of operations at the Borgata, says poker “jumped out very fast” for a number of reasons: “One, if you played poker in New Jersey you were probably in the Borgata database, so those players were marketed to immediately and were able to jump on board quickly. And the poker player is savvier than the new slots player, so they made the jump online in New Jersey right away too.”

While the Borgata may not have posted the highest GGR gains in 2015, it has been able to turn a profit from its online gaming business while others are yet to break even. In the first nine months of the year parent company Boyd Gaming reported EBITDA of $6.2m from its New Jersey facing sites, with more than half of that amount coming in the third quarter alone.

“We expect to see more profitable growth [in the coming months], continued evolution of the online business, and we are excited about the future of online gaming,” Lupo says.

But the Borgata’s long-term positon at the top of the revenue table is under threat. Platform partner bwin.party has just been sold to GVC Holdings, with speculation rife that the Borgata is in talks with other suppliers while looking for reassurances from GVC regarding its long-term commitment to the market.

Lupo is unable to comment on the GVC/bwin.party deal but says the Borgata will “continue to compete” and is “working through the process”.

Caesars Interactive

CaesarsCasino.com/ HarrahsCasino.com/ 888casino.com/ 888poker.com/ WSOP.com

Caesars Interactive was the only New Jersey operator to see GGR fall last year, albeit down just 0.5% to $32.6m. Much like the Borgata, decline was driven by poker revenues tumbling 19% from $13.3m to $10.7m during the period. Spokesman Seth Palansky says poker “is what it is in New Jersey” but the WSOP was profitable in 2015 and Caesars remains committed to the vertical in the long-term.

“We’ve elected not to play in the sandbox as much as others [when it comes to poker]. Just because someone posts more revenues doesn’t mean they were profitable. We can say we ran this category profitably, as our goal remains to be in the business for the long-term. We’re content with being the trusted site and one where players can find good offerings and good software,” he adds.

The operator’s casino sites performed much better, with revenues up 12% YoY to $21.9m but a long way behind the $32.8m generated by Tropicana. Some point to platform partner 888 blowing cold on the US market, with CaesarsCasino.com offering slightly less desktop and mobile games than its rivals. But Palansky says the firm “had a great year” and has become better adjusted to the realities of operating in New Jersey.

“The more we better understand our customers, the better we can tailor offerings, promotions and incentives to meet their needs. Ultimately, we are no longer guessing, we have a couple years of data and we can now improve our offerings. Certainly adding some new and exciting content to our offerings was additive as well,” he adds.

And while Palansky believes it is “fool’s gold” to predict what the next 12 months has in store, he says Caesars expects “continued growth as awareness increases” with “some exciting things in store” to help drive those efforts. “Count us as being positive and bullish looking ahead,” he adds.

Resorts Casino

ResortsCasino.com/ MoheganSunCasino.com

Resorts Casino was the new kid on the block in 2015, launching its NYX Gaming-powered ResortsCasino.com and MoheganSunCasino.com sites in the spring. While still early days, the operator has recorded month on month growth since launch, with total GGR reaching $6.8m since going live at the back end of February.

Resorts’ egaming consultant Ed Andrewes says the operator is very pleased with its performance, but won’t be taking its foot off the gas any time soon. “Resorts was the fastest growing online casino in New Jersey in 2015 and, from a standing start, we are now 11% of the market. That said we are very conscious that growing the first $1m of GGR is the easiest and that our hard work has only just begun.”

The operator has taken a truly multi-channel approach to online gaming, opening the state’s first iGaming Lounge in its Atlantic City casino. And while the lounge hasn’t been a huge revenue driver to date, Resorts says it has been at the core of its efforts to cross-sell online gaming to its land-based database, and vice versa.

Of course, Resorts has an ace up its sleeve in the form of its partnership with PokerStars and Full Tilt, which will launch in the state under its interactive wagering permit in the first half of the year. Stars certainly has the potential to take on and topple the current market leaders, with Resorts in the driving seat to top the GGR table this time next year.

“PokerStars is still the strongest online gaming brand in the whole of the US and we believe they will have a huge impact on rejuvenating the online poker market in New Jersey. Our staff in the casino are constantly being asked by customers when PokerStars is going to launch and it is great to be able to answer “soon”,” Andrewes says.

That, coupled with a number of “really exciting initiatives” in the pipeline, has the potential to shake up the New Jersey egaming market good and proper.