Hard as it may be to fathom now, New Jersey’s online gambling industry was a bit of a trainwreck at launch.
A myriad of technological limitations and other restrictions, along with some odd marketing choices, stifled early industry growth.
And while operators did eventually find their stride, one can imagine how prosperous the industry would be today if they were able to capture and retain more players during the critical launch period.
We might soon get that answer.
A new day in PA
Fast forward four years later, and Pennsylvania is on the precipice of launching its own online gambling sites.
Pennsylvania operators will have a host of advantages that the the early adopters of online gambling in New Jersey did not, making for a much more welcoming environment for players.
This, combined with the experience PA operators will bring to the table, gained either through having learned from NJ operators or from operating a site in the Garden State, virtually guarantees that Pennsylvania’s industry will get off to a much smoother start.
That’s welcoming news, as PA will have its own unique limitations to worry about, thanks primarily to an oppressive 54% tax rate on slots.
The Pennsylvanian advantage
Here’s a glance at the advantages PA online gambling sites will enjoy at launch relative to the New Jersey market.
(Much) better payment processing
When NJ rolled out its iGaming industry, there just weren’t too many viable ways to get money online. ACH (eCheck) payments were hardly a sure bet, and Visa/MasterCard transactions were declined nearly as much as they were accepted.
Players could deposit cash at the casino cage, but that would require making the often long trek to Atlantic City. And back in 2013-14, there was a 50/50 shot that the casino teller never even heard of online gambling.
Since, payment processors have grown more aware and comfortable with the idea of legal online gambling, with two major developments occurring.
- The reintroduction of PayPal as a payment processor for the US online gambling industry.
- New credit card codes specifically for government-licensed online casinos.
In addition, most NJ sites have introduced e-wallet Neteller, and their own prepaid cards (high acceptance rates) as alternative depositing and withdrawal options. And players that prefer cash-in-hand transactions no longer have to travel to AC thanks to 7-Eleven PayNearMe.
Pennsylvania gambling sites should launch with most of the aforementioned options right out of the gate, enabling new signups to get money online and start playing right away.
At the advent of online gambling in New Jersey, strict guidelines were imposed by the NJ Division of Gaming Enforcement on geolocation providers. As a result, provider GeoComply erred on the side of caution, via a huge buffer zone that blocked out gamblers located in some of the state’s main population centers.
Once the tech was proven, the buffer zone was relaxed, and the success rate of geolocation soared to above 95%. Thanks to further tech advances that rate is now even higher, with mobile players also able to geolocate via 4G LTE technology.
Strong geotechnology is a vital component of any ring fenced online gambling industry. It’s especially critical for poker sites to get right, as being booted mid-hand can cost players real-money. If there’s one way to lower retention rates, it’s by causing players to lose money due to technological failings.
Pennsylvania gambling sites will enjoy all the gains in geolocation technology over the past four years, and will be working with a more experienced provider, comfortable in the legal US online gambling space. As a result, we should see far fewer geolocation fails and disconnects in the nascent days of the industry.
A better mobile product
As of 2017, mobile play dominates the NJ online gambling industry. Android and iOS apps feature most, if not all, of the account management components of their desktop equivalents, they’re stocked with hundreds of games, and are tiny in size.
Thus, it’s pretty hard to believe that in 2014 mobile was something of an afterthought. The casino apps were unwieldy, if they existed at all, prone to server disconnects, and typically only featured a couple dozen games. Poker apps weren’t all that much better, often featuring questionable filtering and sorting options, and a limited selection of games.
Pennsylvania gambling operators have a prime opportunity to launch strong mobile platforms. And there’s really little reason why they can’t. The technology is there, and most operators in the market will have already refined their mobile offerings in other markets.
Game selection might be a minor issue at first, but thanks to the proliferation of platforms like the NYX Gaming Open Platform System (OPS), operators should grow both their desktop and mobile game libraries with relative ease.
Promotions that make sense
Back in 2013, it was believed that online poker would be a much bigger revenue generator than it was, perhaps even grossing more money than online casino. Oh, how the industry misjudged that one.
Admittedly, online poker did get off to a fast start. But geolocation glitches, the general decline of online poker, and the capped population of the New Jersey market quickly spelled trouble, and monthly revenue tallies dipped precipitously.
Even the entry of PokerStars couldn’t help online poker rebound. As of October 2017, revenue is about in the same boat as it was two years ago, before Stars launched.
Online casino players were not as bothered by geolocation failures, and were never dependent on other players being online to enjoy the fun. For those reasons and others, that side of the industry thrived, accounting for over 75% of total gross gaming revenue as early as January 2014, swelling to over 90% in the latter half of 2017.
Seeing this trend unfold, Pennsylvania operators are more apt to place the bulk of their marketing and promotional dollars into the casino bucket. This would stand in stark contrast to the situation in New Jersey, where online poker operators held the equivalent of firesales during the industry’s first year.
With spend weighted more toward casino, that side of the industry should mature faster than it did it New Jersey, reaching its revenue potential in under three years, as opposed to five.
All this said, the prospects for online poker in Pennsylvania are better than they were in New Jersey. For one, the technology and payment processing will be stronger, as will the mobile product. But perhaps more importantly, Pennsylvania boasts a larger population than the Garden State, and may launch as part of a four-state liquidity sharing network with Nevada, Delaware, and New Jersey. (New Jersey recently committed to joining the Multi-State Internet Gaming Association).
So while PA ops may want to focus more on casino than NJ did, they probably shouldn’t completely neglect online poker either.
PA has to be better than NJ was at launch
When it comes to online gambling, Pennsylvania has less margin of error than New Jersey did. Reason being, PA faces an effective tax rate that will be at least double New Jersey’s.
That means less money to spend on:
- Brand awareness
Not only that, but sites may elect for significantly lower returns on their games, possibly resulting in even lower retention rates.
Thanks to these hurdles, it is imperative that Pennsylvania does online gambling correctly right out of the gate. Suffer the same fate as NJ sites did in late 2013, and there might not be as clear a path toward recovery.
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