New Jersey iGaming Revenue to Surpass Atlantic City Casino Earnings, Analyst Predicts

It’s a matter of when, not if, iGaming gross gaming revenue (GGR) in New Jersey exceeds that of the nine casino hotels on the Atlantic City Boardwalk.

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The Atlantic City Boardwalk. Casinos there are increasingly vulnerable to iGaming competition. (Image: Shutterstock)

That’s the outlook offered by Deutsche Bank analyst Carlo Santarelli who in a recent report to clients estimated that internet casinos operating in the Garden State could generate as much as $2 billion in GGR this year. That confirms the notion that iGaming is the next significant growth frontier for the industry because in 2019, online casinos operating in New Jersey notched just $483 million in GGR.

Last year, Atlantic City casinos combined to generate $2.85 billion in GGR while online equivalents in New Jersey notched $1.9 billion, but Santatrelli said the chasm between the two is narrowing.

While the gap between land-based and digital casino gaming still stood at over $900 million for 2023, it has tightened meaningfully from the $2.2 billion GGR outperformance of the land-based operations in 2019,” observed the analyst.

New Jersey is one of six states that permits iGaming. The other five are Connecticut, Delaware, Michigan, Pennsylvania, and West Virginia.

Atlantic City Could Be Vulnerable to iGaming

Some studies suggest that iGaming is complementary to casino operators’ land-based venues and that’s a plausible claim, particularly for large gaming companies that can leverage loyalty programs to entice bettors to occasionally visit brick-and-mortar properties to enjoy the benefits of points earned online.

However, Atlantic City could be vulnerable to online casinos. It’s widely believed the market is over-saturated with nine gaming venues and some operators there haven’t made the necessary investments to keep their casino hotels in prime shape, which discourages bettors from driving to Atlantic City and spending money at the city’s gaming venues.

Those issues were amplified last year when operating profits for the nine casinos there shrank on annual basis with just three — MGM Resorts’ Borgata, Ocean Casino Resort, and Bally’s — posting increases.

iGaming isn’t the only source of credible competition to Atlantic City. There’s the specter of three casino hotels eventually calling the New York City area home. A potential response to that scenario by New Jersey could be a new casino at the Meadowlands, but that would represent more competition for Atlantic City.

Familiar Names Lead New Jersey iGaming

New Jersey’s internet casino market is robust in terms of the number of choices consumers have, but data indicate a small amount of operators dominate market share in the state.

Those include Golden Nugget Online Gaming (GNOG), which is a unit of DraftKings (NASDAQ: DKNG). Resorts Casino, which uses the DraftKings iGaming platform in New Jersey, is also one of the leaders there as is Caesars Digital, which leverages well-known brands such as Harrah’s and Tropicana in the state.

Deutsche Bank’s Santarelli noted a wildcard for iGaming operators in the Garden State comes in the form of a proposal to lift taxes on that activity to 30% from the current level of 15%.

“While there are many blind spots with respect to promotional tracking … make no mistake, net revenue continues to grow healthily, despite the promotional acceleration, though the [current] 15% tax rate is important to facilitating this,” observed the analyst.

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