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

When New Jersey's iGaming gross gaming revenue (GGR) surpasses that of the nine casino hotels on the Atlantic City Boardwalk, it's a matter of when, not if.

This is the prediction made by Carlo Santarelli, an analyst at Deutsche Bank, who stated that online casinos in the Garden State would bring in as much as $2 billion in gross gaming revenue this year in a recent report to clients. The fact that online casinos in New Jersey only generated $483 million in gross gaming revenue in 2019 supports the idea that iGaming represents the industry's next big growth frontier.

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.

Out of the six states, New Jersey allows internet gaming. West Virginia, Delaware, Michigan, Pennsylvania, and Connecticut are the other five.

Atlantic City May Be at Risk from iGaming

According to some studies, iGaming is a good addition to land-based casinos. This is a valid point, especially for big gaming companies that can use loyalty programs to get players to occasionally visit land-based casinos so they can take advantage of the benefits of points earned online.

On the other hand, internet casinos might pose a threat to Atlantic City. Bettors are discouraged from traveling to Atlantic City and spending money at the city's gaming venues since it is generally regarded that the market is oversaturated with nine gaming venues and that certain operators there haven't made the necessary investments to keep their casino hotels in great condition.

These problems were made worse the previous year when the operating profits of the nine casinos in the area decreased annually, with the exception of three (Boygata, Ocean Casino Resort, and Bally's, owned by MGM Resorts).

There are other legitimate competitors to Atlantic City than iGaming. The possibility exists that three casino hotels may someday settle in the New York City region. A new casino near the Meadowlands might be New Jersey's answer to that situation, but that would put additional competition for Atlantic City.

Known Faces Head New Jersey Online gaming

Although there are many options available to customers in New Jersey's online casino market, statistics suggests that a select few operators have a majority of the market share in the state. 

One of them is DraftKings' (NASDAQ: DKNG) Golden Nugget Online Gaming (GNOG). Caesars Digital, which makes use of well-known brands like Harrah's and Tropicana in the state, and Resorts Casino, which uses the DraftKings iGaming platform in New Jersey, are two more giants in the industry.

A proposal to increase taxes on internet gaming from the existing 15% to 30% represents a wild card for operators in the Garden State, according to Santarelli of Deutsche Bank.

“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.