It has taken a long time in coming but, within the next few months (first quarter 2019 at the latest), the state of Pennsylvania will enter into the online gaming arena. Since 2013, there have only been three states that have passed regulations allowing the activity – Delaware, Nevada and New Jersey – and Nevada only allows for online poker. Whenever it does open its doors, Pennsylvania will become only the fourth state to have regulations in place for online casino gaming and poker. But what can we expect when they come online (no pun intended)?
An Initial Burst…
Yes, there will be an initial burst of new activity in the Keystone State once their online gaming industry is alive. There’s been a whirlwind of activity as Pennsylvanians anticipate being able to partake of casino gaming from the comfort of their own homes. This falls in line with what occurred in New Jersey when they opened their doors in 2013.
The New Jersey online gaming industry, by all appearances, has been a roaring success. In its first full year of operation (2014), the Jersey online gaming industry has a “win” of nearly $125 million between online casinos and poker. That has ratcheted up quickly over the past few years, topping out at $245 million in 2017 and on pace to shatter that record in 2018 (through October, the “win” has been roughly $242.7 million).
Pennsylvania, by its sheer size alone, should be able to challenge those numbers out of the gate. With its 12.7 million residents, there should be enough business to go around the nine new online casinos that have been licensed inside the state. If Pennsylvania doesn’t do vastly better than the first year of operation in New Jersey and perhaps even challenge the $200 million mark, then they are doing something wrong.
What About Poker?
If you are going to look for a problem area in the burgeoning online gaming industry in the States of America, then online poker would be the area to look at.
While online casino gaming has been thriving in New Jersey, online poker has lagged far behind. The reason for the lack of success has been laid at the door of a lack of players – as in a live setting, poker isn’t the reason for a huge majority of people to gamble – but actions to improve this haven’t done much. The compact between New Jersey and the other two operators in the U. S., Delaware and Nevada, haven’t seen a sizeable impact on player numbers.
The addition of Pennsylvania to the mix, despite more than doubling the number of players, isn’t going to have a huge impact either. Right now, the Pennsylvania system hasn’t compacted with the other three states (it has, however, got a clause that allows for it), meaning that it will keep its 12 million residents to itself for the moment. And even if it does compact, there is currently only one operation that has been able to take advantage of the compact – Caesars Entertainment. It’s WSOP.com brand is operating, through its association with 888Poker, in Delaware, Nevada and New Jersey. Through its Harrah’s properties in Pennsylvania, Caesars Entertainment will be able to compact in Pennsylvania and would be the only operator to enjoy the increased action.
According to the online poker tracking site PokerScout, the combined WSOP/888 operation for the three states currently operating only averages around 190 cash game players over a seven-day average. Compare that to the operations in New Jersey that cannot compact because there isn’t a partner in Nevada or Delaware; PokerStars NJ averages 50 players over a seven-day period and partypoker NJ averages 45. How long will those sites who are operating at a disadvantage to the Caesars Machine allow it to continue?
And the Future is?
For online casino gaming, the future continues to be bright (and this isn’t even looking at the addition of sports betting to the mix). Pennsylvania’s online operation is going to be highly successful, although they might have to rethink some of their taxation rates if they want to fully realize their expectations. There is obviously a market for it – look at the New Jersey numbers and imagine if you could extrapolate that to a state with a sizeable population such as New York, Texas or California (the big prize in the mix). The potential of those numbers is what pushed the legislature in Pennsylvania to pass a comprehensive online gaming bill rather than half-ass it with just poker or only online casinos. You’ve got to have the entire ball of wax to be able to be successful and, yes, it is possible that online casinos could survive quite well without online poker. Online poker, however, isn’t going to survive without the online casinos to bring in the crowds.