Just how bad is it in Atlantic City?
Considering the casinos there were making more money when Bill Clinton was presidential timber than they made last year, pretty bad. And that’s land-based and Internet combined.
The Internet part at least will get better.
Analysts are doubtless correct in cautioning investors not to read too much into the results the state published this month covering the first 37 days of real-money online play. As they point out, the $8.4 million recorded over this period (25 November-31 December), while disappointedly shy of the $10 million-$15 million they’d forecast, has to be balanced against some widely reported technical snags players encountered in accessing the sites and the refusal by most major banks to honor credit card deposits.
So while no one is taking these five weeks as a benchmark it’s obvious the market has a ways to go to hit even the low side of first-year revenue estimates—$200 million to $500 million, currently—and this takes into account the addition of an eighth licensee, Resorts Casino Hotel, which might have added $750,000 or so to the initial reporting had it been operational, assuming it would’ve come in around the mean.
The good news is it does appear to be attracting new money. Official figures show more than 155,000 player accounts had been created as of 12 January. Signups in the new year were up 23 percent at that point and were averaging 2,400 new accounts per day.
Speaking earlier this month, Keith Smith, president of Las Vegas-based Boyd Gaming, which co-owns market leader Borgata Hotel Casino & Spa with MGM Resorts International, said 60 percent of Borgata’s two poker sites and one casino site had not visited the property in more than a year, and more than 75 percent had made fewer than two trips. Online and land-based poker play combined was up more than 40 percent in December from December 2012.
“So it’s a different customer,” said Tom Balance, Borgata’s chief operating officer. “It also skews more male than the conventional brick-and-mortar customer.”
And this points up the all-consuming power of branding in cyber-world.
Borgata and Caesars Interactive together accounted for more than 73 percent of revenues through the first reporting period. Borgata and its platform partner, bwin.party, grabbed 45 percent of the market, and poker generated slightly more than half of that. The ratio was about the same for Caesars and its partners, 888 and Amaya, which together market two poker sites. (Borgata is also live via Party Poker with a mobile app for Apple iOS devices.)
Geo-location rejections, one of the biggest problems experienced early on, have been attributed mainly to weak wi-fi signals. This is likely to emerge as an ongoing problem in more populous states.
Problems with bank rejections will be more difficult to resolve.
Payment-processing has been illegal in the United States since the passage in 2006 of the Unlawful Internet Gambling Enforcement Act, and despite the advent of regulation most of the big institutions still refuse to touch the business for the sake of a single state, or three, at least not without something bullet-proof by way of approbation from Washington.
American Express even prohibits the use of its cards within casinos.
Visa and MasterCard will process online-gambling transactions where it is legal, but major national card issuers, J.P. Morgan Chase and Bank of America among them, and several leading regional lenders, say they don’t allow it either.
The reasoning, as one of the heads of compliance with the American Banking Association explained: “Banks are weighing the risks and rewards of allowing this small population to conduct limited transactions that could cause a whole lot of trouble down the road if something goes wrong. They have to do the math and see if it’s worth it to flip the switch or not.”
For New Jersey it remains, in the words of chief regulator, David Rebuck, the “biggest issue”.