As was the case across the country, casinos in New Jersey were closed for the entirety of May. But unlike most states, New Jersey’s gaming industry was able to mitigate the damage, as its revenue fell by 65%, not 100%.

The reason: New Jersey’s thriving online gambling industry.

According to the latest revenue report issued by the New Jersey Division of Gambling Enforcement, the state generated $95.8 million during the month of May.

Here’s a breakdown of where the revenue came from:

May produces another new revenue record

New Jersey’s online casino and poker operators have set new revenue records in each of the last three months:

  • March: $64.8 million
  • April: $82.6 million
  • May: $85.9 million

Long before the Coronavirus pandemic, online gambling was a rousing success in the Garden State. The mid-March closure of the state’s land-based casinos coupled with the suspension of all major sports leagues turbocharged online casino and poker revenue.

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There is no shortage of narratives accompanying this data.

Shutdown related, an extension of pre-COVID-19 growth, or both?

A lot of analysis of the numbers focuses on the year-over-year growth. Still, as the chart above shows, Y/Y growth was quite high in January and February, before the shuttering of any casinos. That trend extends back to the launch of online sports betting in August 2018.

The Y/Y numbers (+124% in May) are certainly impressive and worth noting, but it’s essential to place them in the proper context. Pre-shutdown, the state’s online casino industry was growing at an extraordinary rate.

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Setting aside online poker, for the time being, it’s likely the industry would have grown by about 70% in May had the nation fallen victim to the pandemic. Under those circumstances, New Jersey would have generated roughly $62.1 million in online casino revenue had the pandemic somehow avoided the US, and the COVID-19 shutdown added $19.3 million to the tally.

Playing this hypothetical scenario out to its conclusion, the percentage of excess online casino money attributable to the casino shutdowns is just shy of 25% of the total tally.

Or put another way, the organic growth is more significant than the growth stemming from the shutdown of land-based casinos.

  • Organic growth (est.): $25.6 million
  • COVID-19 casino shutdown growth (est.): $19.3 million

What happens when casinos reopen?

The million-dollar question is how much of these gains will erode when Atlantic City land-based casinos reopen?

There are reasons why online revenues might plunge when the land-based casinos reopen:

  • As seen in Las Vegas, there’s pent-up demand for casino gambling and some level of socialization.
  • Unemployment has skyrocketed, and people across the country are struggling and as the shutdowns take their toll, they may not have the same level of disposable income they had pre-pandemic.

There are also some reasons to suspect the gains will be stickier:

  • The novel Coronavirus isn’t going to disappear, and that may keep people at home, gambling on their computers and phones, rather than heading to an Atlantic City casino.
  • This is likely the first exposure to online gambling for some former land-based gamblers, and they may have developed a taste for it, or at the least, will use a mix of retail and online gambling.

The answer is likely somewhere in the middle.

Patrons have certainly gotten a taste of online gambling, but it’s likely most of their play will shift back to land-based venues over time, with some customers morphing into multi-channel gamblers, and an even smaller group permanently shifting to online play. Even if things return to normal tomorrow, that migration will take time. Factors that could speed up or slow down the shift are the economy and the perception of casino safety in the age of Coronavirus

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