New Jersey is approaching its third anniversary of launching regulated online casino and poker games. By any measure - financial, regulatory, consumer protection, or otherwise - the state's regulated online gambling market has been an unqualified success.
As Pennsylvania lawmakers move closer to authorizing regulated online gambling in the Keystone State (a vote on HB 2150 is expected as soon as this week), they should look closely to the successes of New Jersey as both a rationale for action and a roadmap for moving forward once a bill is signed into law.
Online gambling has produced significant tax revenue for New Jersey
Since launch in November 2013, New Jersey's regulated online gambling sites have generated some $54 million in direct tax revenue for the state.
That number doesn't speak to the indirect revenue regulation has generated; online gambling supports dozens of jobs in New Jersey, and the businesses responsible for ancillary functions (such as security, marketing, and platform operation) all generate additional state revenue on the business tax side.
And that tax revenue looks set to only increase in the years ahead. As the chart below illustrates, online gambling revenue in New Jersey is on a clear upward trajectory. As online gambling revenue increases, so does the tax revenue:
Pennsylvania would realize an even greater revenue boost than its neighbor, at least if current legislation stands. Not only is Pennsylvania's market substantially larger than New Jersey's, but Pennsylvania is set to also receive some $100 million in upfront licensing fees, revenue that New Jersey did not capture.
Pennsylvania would also have the benefit of New Jersey's experience and could hit the ground running as a result, further increasing the tax revenue potential from day one.
Online gambling activity has boosted activity at land-based casinos in Atlantic City
Speaking of New Jersey's experience, the state's land-based casinos have been universal in their answer to the question of how online casino activity impacts land-based casino activity: Online gambling is a net positive for land-based casino operators.
Officials from companies such as the Borgata, Caesars, and Resorts have repeatedly stated that online gambling largely attracts new customers to their brands (a view generally supported by relevant research), and that online gambling is proving to be an effective promotional tool for driving traffic to Atlantic City.
According to Thomas Winter at the Golden Nugget in New Jersey, 80% of signups at their online casino to date have been new customers that didn't exist in the Nugget's land-based customer database. The 20% of online signups who were existing customers increased their play at the brick-and-mortar casino by an average of 11% after they signed up online.
A big reason for the lack of overlap? The online customer is in many ways a different one than the typical land-based customer. According to Winter, the average age of the Golden Nugget online customer is 41, vs an average age of 57 for the land-based customer.
New Jersey consumers are better off post-regulation
The state and the industry would both benefit from regulated online gambling in Pennsylvania. The consumer would as well.
In the wake of regulation in New Jersey, a number of offshore poker sites and casinos either scaled back their operations in the state or left the state altogether. New Jersey officials used the regulatory powers established by online gambling regulation to crack down on marketing affiliates promoting offshore sites.
In the place of those unlicensed operators, consumers interested in online gambling found state-regulated sites backed by recognized companies with roots in New Jersey. They found proven technology designed to prevent minors, self-excluded players, and out-of-state players from accessing New Jersey's regulated online casino sites. They found enhanced problem gambling controls, greater protection for their sensitive personal and financial information, and games certified as above-board by independent testing labs.
New Jersey has forged the path and proven the playbook for regulated online gambling. Pennsylvania's casino industry, taxpayers, and consumers all deserve a chance at replicating what has been a clear success for their neighbors to the east.
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