A long-held argument used by opponents of online gambling has been thoroughly debunked, at least according to the five iGaming entities operating in New Jersey.
As documented by Steve Ruddock of Online Poker Report in a May 10 article, each of the Garden State’s five iGaming licensees – Caesars, Golden Nugget, Resorts Casino, the Borgata, and Tropicana – has gone on record to state that online casinos and poker rooms supplement their current brick and mortar business.
These statements directly reject the contention of many iGaming detractors who regularly claim that online gambling alternatives only serve to “cannibalize” patronage from land-based venues.
Rather than cannibalize existing business, Ruddock notes that New Jersey’s five iGaming licensees – which are all existing land-based casino operators in Atlantic City – have reported the direct opposite.
Namely, those players registering for online casino and poker room accounts are new customers, and not previous land-based patrons who have simply transferred their spending.
In 2013, as the New Jersey iGaming industry was preparing to launch, Caesars Interactive’s chief executive officer spoke with CNBC to deliver a ringing rejection of the cannibalization argument:
“It’s been proved for a long time, in the U.K. and Australia, that online gaming does not cannibalize offline gaming.”
In February of 2014, during a conference call to discuss earnings reports for the Borgata, Keith Smith – president and chief executive officer of Boyd Gaming, Borgata’s parent company at the time – told investors that 85 percent of customers on the Borgata, Pala, and PartyPoker platforms were new customers:
“Online gaming is growing our database (and) creating a long-term opportunity to market Borgata to an entirely new group of customers.”
In March of this year, David Satz – a senior vice president of government relations for Caesars – delivered testimony to the Pennsylvania legislature as that state pondered its own iGaming bill. According to Satz, a full 80 percent of players signing up for its Caesars-, WSOP-, or 888-branded iGaming platforms were not found within the company’s existing land-based casino database.
During the same hearing in Pennsylvania, the Golden Nugget submitted written testimony which stated that 89 percent of players on its Golden Nugget, Betfair, and PlaySugarHouse platforms had never been entered into its land-based database.
This May, a representative for Resorts Casino – which maintains the Resorts and Mohegan Sun iGaming platforms, along with PokerStars NJ under its license – told Online Poker Report that 75 percent of its online player base were new customers who hadn’t been tracked by the land-based venue.
Per that representative, the physical Resorts Casino had not experienced any noticeable decline in traffic, even as the company marketed iGaming to existing brick and mortar players:
“In the earlier days from launch the bricks and mortar database was a key recruiting ground for the online business and it still remains an important part of the marketing mix.”
Furthermore, operators have evidence showing that so-called “lapsed” customers – or players who previously recorded consistent casino activity before stopping for the last 12 months – have been brought back into the fold by the iGaming option.
In an April 3 article published by Global Gaming Business News, Tropicana Entertainment’s vice president of online and internet marketing Luisa Woods revealed that 60 percent of the company’s iGaming customers were new acquisitions.
But more importantly, Woods said that one-half of the remaining 40 percent playing on Tropicana Casino or Virgin Casino are lapsed players who reengaged with the live venue after signing up online:
“Not only was their online spend completely incremental, but they also grew their land-based spend.”
All five of New Jersey’s iGaming operators have now offered conclusive evidence against the cannibalization theory. With that in mind, the current legislative debates in Pennsylvania and Massachusetts may be clarified to show that online casinos and poker rooms don’t adversely affect their land-based counterparts.