NJ Online Gaming Struggles giving Gov. Christie Budget Headaches

Before New Jersey online gaming launched last November, analysts had all kinds of promising revenue projections. Some of the estimates ranged from $250 million to a whopping $1.2 million in the gaming market’s first year. Even Governor Chris Christie jumped aboard the inflated projections after stating that he expected the market to easily generate over $1 billion, with about $180 million of this being tax revenue.

So far, all of these predictions are way off because, after five months, NJ internet gaming is only on pace to earn about $12 million in tax money – almost $170 million below Christie’s vision. This means that the Republican governor is facing a big gap in his 2014 budget. As a result, Christie said he would start cutting pension payments to cover the shortfall.

Things don’t look to get any better for the NJ online gaming market in the immediate future. Revenue dropped for the first time in five months after pulling in $11.4 million – about $500k less than March.

One thing that could really help create a boost for NJ internet gaming involves fixing the credit card issues. As of now, over 50% of credit card deposits are being rejected by companies like Visa and Mastercard. Assuming this rate were to be lowered significantly, then players would be less likely to be turned off from online gaming.

But the reality now is that credit-card rejection rates at legal online casinos and poker sites aren’t going down any time soon. And this only adds to New Jersey’s woes when considering how poorly their casinos have performed in recent years.

The state’s 11 casinos have seen revenue declines for seven straight years, dating back to their peak of $5 billion in 2006. Last year, Atlantic City casino revenue fell another 6% down to $2.8 billion.

Based on the latest struggles, it’s clear that neighboring competition is playing a major role in the state’s sagging gaming earnings. Pennsylvania’s casino market has been growing quite a bit over the years – most notably around the Philadelphia area, which is just 60 miles away from Atlantic City. Philadelphia residents used to travel to the seaside resort, but now they can just stay closer to home and gamble.

In any case, Christie and the state of New Jersey are in a bigger crunch than ever before. And unfortunately, it doesn’t seem as if internet or land-based gaming will be the solution to the budget problem.