Atlantic City’s casinos had until the end of June to partner up for the internet gambling expertise they need to flourish in an untried intrastate market that could be worth as much as $1 billion a year or as little as $250 million, depending on who’s doing the guessing.
The New Jersey Division of Gaming Enforcement assigned the deadline to ensure regulators have enough time to vet the qualifications and backgrounds of the companies that will be providing key support services and infrastructure. It’s tricky since the ablest providers, or certainly the most experienced, are offshore, and some of the best are encumbered by legal baggage on the U.S. side of the Pond.
As of this writing, all but two of the 12 casinos, Revel and The Atlantic Club Casino Hotel, have secured online partners:
• Sister casino Trump Plaza has taken a different route, partnering with Internet betting exchange giant Betfair. UK-based Betfair operates casino software through GameAccount and poker through Playtech. The company also owns TVG, which runs online account wagering on U.S. horseracing and is licensed in New Jersey.
The Resorts-PokerStars deal is likely to be problematic. Bwin.Party also, though perhaps less so.
PokerStars, the world’s leading site for poker players and perennial bête noir of the American Gaming Association (a.k.a. Caesars), will have to overcome the disrepute it can’t seem to shake for having taken bets in the States post-UIGEA. The AGA successfully opposed the company’s bid to buy The Atlantic Club, which the commission rejected earlier this year, and it opposes the Resorts partnership.
Bwin.Party recently settled with the state of Kentucky to avoid further legal troubles there and has flip-flopped in its pursuit of a Nevada license, which it has yet to secure.
From there it’s a matter of what time and marketing and the possibility of interstate player pools (and possibly international ones) hold in store. New Jersey will come out of the gate with an obvious advantage in terms of liquidity over tiny Delaware, its closest competitor, and Nevada, the first mover in the nascent US online market, which has the allure of Las Vegas going for it but less than one-fourth the population. It’s also a market that finds itself happily sandwiched between two of the largest metropolitan areas in the country in New York City and Philadelphia.
The Wall Street view, expressed by the likes of Spectrum Gaming Capital’s Robert Heller and Macquarie Capital’s David Berman, has been upbeat. Heller believes it could be the “savior” of a market that has seen its land-based business plummet more than 40 percent over the last six years. Berman, speaking at May’s East Coast Gaming Congress, called it a “big boon for Atlantic City and New Jersey”.
Global Betting and Gaming Consultants own forecasts are for first full-year revenues of US$ 246 million for casino and poker combined.
Washington, D.C.-based lobbyists Interactive Media Entertainment & Gaming Association pegged the first-year potential at $230 million. That was back in 2010.
From here things acquire more of a glow. John Kempf, managing director of RBC Capital Markets, puts the annual revenue potential in the early going at $500 million-$600 million. Las Vegas-based investment brokers Union Gaming Group expect the market to generate $530 million in its first full year, growing to $840 million “after a five-year ramp”.
“All in, we remain bullish,” the firm said.