Market Makers Confident in Online Gambling’s Ability to Boost Atlantic City Action

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Monday, May 27th, 2013 | Written by Lucy Brown

The consensus of Wall Street analysts appears to be that online gambling is a bet with a big potential payoff for New Jersey.

A number of the top gambling analysts were assembled at the East Coast Gaming Congress last week to offer their assessment of how online gambling will impact New Jersey in general – and Atlantic City specifically.

Atlantic City has been struggling over the last few years to reach revenue levels that were once considered commonplace.

While no single factor is responsible for the downturn, most point to a combination of increased regional competition, a decline in the average property quality and the impact of Hurricane Sandy as the driving force behind Atlantic City’s poor fortune.

New Jersey Governor Chris Christie cited that decline as part of his motivation for signing the bill that brought legal, regulated online gambling to New Jersey back in February.

Outlook positive for New Jersey online gambling

According to AP coverage of the ECGC, the majority of speakers seemed bullish on the potential for online gambling to reverse the recent decline.

Macquarie Capital’s David Berman said he saw online gambling as a “big boon for Atlantic City and New Jersey.”

Robert Heller, president of Spectrum Gaming Capital, went even further when he characterized online gambling as a “savior” for New Jersey’s casino industry.

New Jersey’s online gambling will only be available within state borders at launch, but there’s room in the law to allow New Jersey to serve as a hub for U.S. online poker should other states want to come on board. And NJ regulations further permit the state to join up with other regulated markets – think UK poker sites – if such compacts are judged to be legal under federal law.

Will online casino growth come at a price?

While analysts were in general agreement on the potential for online gambling to generate significant revenues for New Jersey casinos, they were less so on the issue of cannibalization – the fear that online casino revenues will come directly at the expense of land-based casino revenue.

Research on the subject has been somewhat limited. But what research does exist suggests that online casinos have a complimentary impact on their land-based counterparts.

So instead of drawing revenue away from brick and mortar casinos, the introduction of online gambling actually increases the total pool of gambling dollars in play – meaning revenues rise at the physical casino even as they grow at the online casino.

That was the conclusion of researchers Kahlil Philander and Ingo Fiedler in their article “Online Poker in North America:Empirical Evidence on its Complementary Effect on the Ofﬂine Gambling Market” (read here).

PokerStars not a factor?

One topic not apparently not raised in the conversation over Atlantic City’s online future was the role of PokerStars in New Jersey’s regulated market for online gambling.

PokerStars is in the midst of a dispute with the Atlantic Club Casino over a purchase contract terminated by the ACC at the end of April.

The unspoken position of analysts at the ECGC appeared to be that New Jersey was on the path to a successful online gambling industry with or without the presence of PokerStars.