Live PA Poker Market Struggles As Online Sites Gear Up For Launch

Two operators recently backed out of plans for online poker offerings in Pennsylvania, which comes as the state's live rooms are pulling in less rake.
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The Keystone State’s 10 brick-and-mortar poker rooms are collectively experiencing a lackluster 2018.

Through October, Pennsylvania’s card rooms raked about $46.55 million, according to state figures. That’s down about 6% compared to the $49.5 million raked during the first 10 months of 2017.

The 225 poker tables generated about $59.1 million in 2017, a slight uptick from $58.6 million in 2016, which was about $1 million more compared to 2015. In other words, the state’s poker market had been growing slowly in recent years, but it will likely take a step back in 2018. This is despite the fact that both Parx and Sands debuted totally revamped card rooms earlier this year.

Pennsylvania has already approved some companies for online poker sites, though two operators — Mohegan Sun and Stadium Casino — recently backed out of their plans for online poker licenses. The lack of growth in live poker surely isn’t giving anyone the warm and fuzzies about the online vertical right now.

But it might be less to do with Pennsylvania’s poker market and more to do with New Jersey’s that is keeping firms away from a ring-fenced PA online poker offering. Indeed, it is absolutely imperative that the state link up with New Jersey, and other states, to share players, which is the only way the industry could see another boom.

New Jersey’s shrinking online poker revenue

As most industry watchers now realize, the Garden State’s online poker market has been a buzzkill for poker players hoping for some growth in the game.

Through October, New Jersey’s three online poker licensees generated $18.06 million in revenue, down 11.9% compared to the $20.51 million raked during the first 10 months of last year. The decline has happened alongside strong growth for the other authorized online casino games, where revenue was up 22.3% year-over-year through October.

Poker contracting with the other games growing has been the trend for quite some time.

This year will be one of the most disappointing for New Jersey online poker. Revenue of $24.25 million in 2017 was down 8.5% compared to $26.51 million in 2016. The revenue in 2016 was an 11.3% gain over $23.8 million in 2015 (due mostly to the entry of PokerStars to the market). However, 2015 rake was down a whopping 18.1% compared to 2014.

New Jersey online poker launched in late 2013.

Earlier this year, NJ began sharing liquidity with Nevada and Delaware, but given the small player pools in the latter two states, there’s been little benefit to the overall industry. Nevada poker revenue (the state doesn’t give a breakdown between live and online) has been flat for years and similarly flat since the three-state launch.

NJ and PA live poker show warning signs

Online poker’s struggles reflect an overall contraction in poker, though the decline in rake from the brick-and-mortar tables has been less pronounced.

Atlantic City’s six live poker rooms raked $24.03 million through the first 10 months of 2018, according to state figures. That was down 5.5% compared to the $25.44 million raked through the same period in 2017. The Garden State’s brick-and-stick rooms raked $30.05 million in 2017.

Live poker revenue was $30.79 million in 2016, so the decline last year was about 2.4%.

The regional casino boom in recent years has played a role in decreasing Atlantic City’s designation as an East Coast poker hub, but the lack of growth in Pennsylvania could be a further warning sign for the game. In short, poker needs an influx of new players, something which it had in abundance during the pre-Black Friday boom years.

The market in New Jersey shows that simply having online poker in the mix won’t automatically increase the demand for live games. And it’s not simply a matter of having smaller stakes available online so people can risk less as practice before sitting down at a $1-$2 no-limit hold’em or $2-$4 limit hold’em game in their local casino. Online poker needs liquidity.

Liquidity sharing

While sports betting booms, poker is likely to remain stuck in the mud unless a national interactive component emerges. Though a couple of operators have backed out of Pennsylvania online poker, the potential is there for Pennsylvania to join Nevada, New Jersey and Delaware, exposing online poker to roughly 26 million people.

That’s still a far cry from what online poker, and thus live poker, would need, but it’s a step in the right direction. That four-state network would still be hampered by the fact that Nevada and Delaware have only WSOP/888 poker sites.

In addition to those aforementioned states, Michigan and New York are frontrunners for online poker authorization in 2019. Other states could emerge as online players, thanks to the need for states to consider online/mobile sports wagering along with brick-and-mortar sportsbooks.

David Rebuck, director of the New Jersey Division Gaming of Enforcement, put it succinctly in an interview with the Associated Press in late 2017. “If we win sports wagering, online gaming will go to every state that adopts sports betting,” he said. “As soon as sports wagering is legalized, online gambling will follow right behind it.”


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