The vibrance of the neon lights reflecting off the glistening pockets of the Atlantic Ocean’s night-black waters that lap mercilessly against the famous New Jersey Boardwalk is no longer the prime spectacle it once was in the world of gambling. The future lies elsewhere.
The Atlantic City casinos, the nine glittering crown jewels on the boardwalk, may soon be overshadowed in terms of gross gaming revenue (GGR) by the rapidly growing behemoth that is iGaming. According to Deutsche Bank analyst Carlo Santarelli’s recent report, online casinos in the Garden State are poised to generate a staggering $2 billion in GGR this year, up from just $483 million in 2019.
In contrast, last year the combined GGR of the prosperous casinos in Atlantic City only touched $2.85 billion, with the online counterparts raking in a very close $1.9 billion. The gap isn’t just closing; it’s on the verge of a dramatic flip. The land-based casinos outperformed their digital cohorts to the tune of $2.2 billion in 2019, but the difference has now dipped below a billion. Santarelli’s prognosis is clear: the digital tide is surging.
Despite only six states in the US currently permitting iGaming—Connecticut, Delaware, Michigan, Pennsylvania, West Virginia and, of course, New Jersey—the industry’s growth potential is monumental. The booming iGaming sector offers an exciting prospect, especially for larger gaming corporations who can take advantage of extensive loyalty schemes, encouraging customers to visit land-based establishments and enjoy their virtual winnings in an immersive, tangible setting.
Yet, on the flip side, online gaming’s threat to Atlantic City’s grandeur is undeniable. Some industry observers consider the city’s offering of nine gaming venues as bordering on over-saturation. Moreover, several operators may have failed to pump the necessary funds into their establishments to maintain their attractiveness, thereby discouraging patrons from visiting and loosening their wallets.
These concerns have only been magnified since last year when three of the nine distinguished casinos—MGM Resorts’ Borgata, Ocean Casino Resort, and Bally’s—experienced dwindling profits. Industry insiders fear iGaming may not be the only competition threatening the city’s casinos—the prospect of three casino hotels emerging in the New York City area looms large. New Jersey’s potential riposte, a brand new casino at Meadowlands, would merely offer more rivalry for Atlantic City.
Interestingly, New Jersey’s iGaming market is dominated by a handful of operators despite a myriad of options for consumers. The market leaders include Golden Nugget Online Gaming (GNOG), a sub-unit of DraftKings (NASDAQ: DKNG), Resorts Casino, and Caesars Digital. The latter has reached this prime spot by leveraging iconic casino brands in the state including Harrah’s and Tropicana.
Both online and offline, the question looms on the horizon—will the boardwalk’s gambling glory wane in the face of digital disruption? This rising phoenix, the iGaming industry, makes a striking argument for an affirmative answer. However, with some unsettled variables like a proposal to double the iGaming tax rate from 15% to 30%, the allure of digital versus traditional gaming is a gamble in and of itself.
