Gaming Analyst Says Online Gaming in New Jersey Will Grow; Delaware Unprepared
In an interview with the Las Vegas Review-Journal, Brian McGill, a gaming analyst for Janney Montgomery Scott, said that online poker will grow in New Jersey, but that Delaware was unprepared for an iGaming launch.
"We still think that online gaming will ultimately grow into a meaningful driver of revenues in New Jersey,” McGill said. “But it will take some time to see it ramp.”
McGill believes that annual revenues can fall “on the high side” of the $200 million to $1.8 billion estimates.
As for Delaware, where online websites are run by horse tracks and in conjunction with the state lottery, McGill isn't as bullish.
“There was little promotion or information unless you went to one of the track’s sites," he said. “You could not find any information initially at the actual casino in the track.”
McGill is a New York resident, and he traveled across state lines to participate in the New Jersey soft launch and to experiment in Delaware. He believes that online gaming could be a "significant catalyst" for Boyd Gaming Corp., the operators of the Borgata Hotel Casino & Spa. McGill says that the Borgata could represent up to 20 percent of the Garden State's online gaming market.
Moody's Investors Services Vice President Peggy Holloway agrees with Boyd's potential in New Jersey.
"As a single-asset company, Borgata stands to benefit more from incremental revenue from online gaming," Holloway said.
Borgata is partnered with bwin.party, the operator of partypoker.
Holloway still believes there will be growing pains, and that revenue increases won't come immediately.
“Operating margins will be about 10 percent to 20 percent, but startup costs will likely lead to operating losses for at least the first year,” Holloway said. “Nevertheless, online gaming is a much-needed boost for a market that has suffered protracted declines in gaming revenues amid increased competition from neighboring states and weak consumer gaming demand.”
Moody's release a report last week that online casino revenues would be between $250 million and $500 million in the first year. Fitch Ratings also released a report, predicting the revenue to be between $200 million and $300 million.
Gov. Chris Christie predicts that revenue would reach as high as $160 million by July of 2014. Christie originally forecasted $180 million, but the tax rate was reduced in the final bill.
New Jersey Senator Jim Whelan disagrees with both predictions.
"From the get-go, we thought the number was, frankly, absurd. I never thought the state was going to hit the mark, even the revised mark," he said.
Whelan believes the figure will be "well under $100 million given the time constraints."
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