Las Vegas Review Journal – Lost in the heated rhetoric over the expansion of Internet gaming is a harsh reality. Legal online wagering has not been the financial windfall many analysts predicted.
Initial returns from the three states that enacted Internet gambling laws are not overflowing the balance sheet. New Jersey’s online revenue is a letdown. Delaware’s figures are inconsequential.
Nevada won’t break out online poker revenue on a monthly basis until at least three websites accept bets. The third site was unveiled last week, meaning February’s statewide gaming revenue totals — which won’t be known until late March — will provide a small window into the extent of the activity here.
Internet gaming proponents argue that it’s early in the game.
The legal and regulated domestic market hasn’t even celebrated its first anniversary. Nevada’s initial website is just 10 months old. Delaware launched on Halloween; New Jersey went live shortly after Thanksgiving.
Factors beyond the usual startup issues kept many gamblers offline.
The major challenge is that in all three markets, the wagering must take place on computers or mobile devices within that particular state’s borders.
Nevada is a mostly rural state with a population base that barely supports two poker-only websites, let alone a third.
New Jersey has 9 million residents and is adjacent to East Coast population centers, including New York City and Philadelphia. State gaming regulators have registered almost 200,000 online player accounts in the Garden State since the end of November.
However, payment processing issues involving banks unwilling to accept online gaming-associated credit card transactions have kept many players away from the virtual tables. Also, geolocation errors blocked some New Jersey customers after they were mistakenly perceived as being in another state.
“Online gaming is still in its infancy, Union Gaming Group analyst Robert Shore said. “So we don’t want to extrapolate too much from initial data points.”
New Jersey reported $9.5 million in Internet gaming revenue for January. The figure was a 28 percent increase over December’s numbers, but far below the $12 million to $15 million per month predicted by most analysts.
Eilers Research gaming analyst Adam Krejcik said geolocation and payment processing errors factored in January’s revenue figures, although the effect was less than in December.
“That said, we would still categorize this month’s data as a slight disappointment,” Krejcik said.
