NJ Internet gambling underwhelming, under attack in first year, but it still helps casinos

Internet gambling in New Jersey has been underwhelming in the year since it began, and it is now under attack by opponents looking to shut it down, even as it provides a small bit of help to Atlantic City's struggling casinos.

When Internet gambling was launched, it was hailed by many as a potential game-changer that would help reverse years of declining revenues at what were then Atlantic City's 12 casinos. Gov. Chris Christie's administration expected online betting to bring in $1 billion in its first year.

But only one-tenth of that — just over $111 million — has materialized. Four casinos have closed and a fifth is poised to do so next month. And one Internet gambling company, Ultimate Gaming, left the market after an unsuccessful fling with the Trump Taj Mahal.

But even the small revenue boost from online gambling is helping the casinos that offer it. In several months, Internet winnings were the difference between the surviving casinos posting a revenue decline or an increase compared with a year earlier.

"We've had some victories and we've had some losses," said David Rebuck, director of the state Division of Gaming Enforcement. "From a regulatory standpoint, it's working really well, without any catastrophes, meltdowns or scandals. On the negative side, it was projected to be a much stronger financial performer."

The industry was plagued by problems in its infancy, including the geolocation software used to ensure that a gambler is physically within New Jersey's borders. That issue has largely been resolved, and false rejections now occur less than 5 percent of the time, Rebuck said.

A more serious problem is the continuing reluctance of many banks to process Internet gambling credit card transactions, even though the U.S. Justice Department has declared Internet gambling legal as long as it is done within a single state and does not involve bets on sporting events. That has left automated bank transfers as the main way players fund accounts. New Jersey authorities have met with many credit card companies and banks to tout their strict regulations and oversight of the industry but have failed to change many minds.

And on top of all this is a well-funded push by casino magnate Sheldon Adelson for a law banning Internet gambling nationwide. The Casino Association of New Jersey urged the state's congressional delegation to resist any attempt to pass such a law.

Rebuck said a goal for the industry's second year is to increase player pools in online games like poker. He has been in discussions with authorities in Nevada and the United Kingdom about reciprocal agreements to expand online gambling but says no deal is imminent. The expected approval of PokerStars' new owner, Amaya, to offer Internet gambling in New Jersey is still under review and won't happen until early 2015 at best, Rebuck said.

Despite its slow start, Internet gambling has its fans, many of whom say they gamble more frequently now that they can do it in their living room.

"It's convenient. I don't have to drive to AC," said Dennis Lopez of Somerset, an avid online poker player. "If I really feel like playing, I don't have to go to a casino or find a local game. I can just fire up my laptop and play in a matter of seconds."

Internet gambling revenue has been slowly declining in New Jersey in recent months, leading Deutsche Bank analyst Andrew Zarnett to reduce his revenue estimate for 2015 from $250 million to $150 million.

Others are more optimistic. On Monday, the Pala Indian tribe of California is expected to launch its Internet gambling site in New Jersey, the first tribe to do so. Rebuck said another company wants to join the New Jersey market as well, but he would not identify it. And Cathy Ruela, a 31-year-old from Morris County, recently won the state's largest online jackpot while playing slots on her laptop: $1.3 million.

"Internet gambling has worked out pretty damned well for me," she said.


Wayne Parry can be reached at http://twitter.com/WayneParryAC