New Jersey is celebrating their two-year anniversary for legalized iGaming. They are also experiencing tremendous growth thanks primarily to casino games. Next door in Pennsylvania, lawmakers are making headway towards legalizing online gambling.
We could see our second major market enter the regulated market in 2016 and this will likely prompt others to take action. When these other states start the process of regulating online poker and gambling, they need to take a look back at the lessons learned by current operators in order to avoid mistakes and quickly grow their market. Below are three lessons learned over the past two years by the regulated iGaming market.
Online Poker is Not Enough
It was a nice pipe dream that online poker regulation could bring significant tax income to states, but the reality is that poker is a specialty market that isn’t coming close to living up to the hype.
On the other hand, casino games are doing very well. Just look at New Jersey and the tremendous growth that casino games have enjoyed in 2015. Golden Nugget and Tropicana have both been able to carve out a significant chunk of the online gambling market despite not having online poker.
Some states such as California may be able to get by with an “online poker only” form of regulation but other states will need casino games to make online gambling expansion feasible, at least in the present market.
Geolocation and Online Security Measures Are Doing Their Job
Naysayers claimed that geolocation and security measures to ring fence online poker players in NJ, NV and Delaware would not be successful and computer savvy individuals would be able to bypass the controls. That hasn’t happened.
In the two years that online gambling has been regulated in the United States, there have been zero instances of underage online gambling. Furthermore, players outside of the regulated states are unable to get in for real money poker action. Play money is as far as anyone gets and some sites even block that.
Right Sizing of Markets is Necessary
As we have learned in Nevada and in New Jersey, casinos will need to be mindful regarding how many sites their market can support. Ultimate Poker paid the price by trying to expands too quickly into New Jersey and could not establish adequate market share.
Their failure to be profitable in New Jersey was made worse when WSOP.com became the top site in Nevada. There simply was not enough traffic in the state to adequately support two sites and Ultimate Gaming went out of business.
NJ online poker may be faced with a similar problem once PokerStars opens. The four sites presently operating are going to take a significant hit and it remains to be seen which pairing between Borgata/Party and WSOP/888 will be able to survive with PokerStars.
When online gambling expands, casinos will need to be mindful of the market and how much market share they can reasonably claim, especially for online poker. Preventing oversaturation of the market should be a goal of every casino, even if it means staying out of the online market or reducing their footprint.