Bloomberg News

N.J. Online Casinos Reassess Marketing After Slow Start

May 24, 2014

Online gambling’s slow start in New Jersey, the most-populous U.S. state to legalize Internet bets, has casinos reassessing their marketing to would-be players.

Boyd Gaming Corp. (BYD:US), the leader through its Borgata Hotel Casino & Spa-related websites, is reducing advertising after reporting a $3.2 million loss from the business in the first quarter. 888 Holdings Plc (888), which operates the US.888.com site, is shifting its advertising focus to slot machines from poker.

“We are absolutely shocked by the slowness of the market,” Brian Mattingley, chief executive officer of London-based 888, said in a telephone interview.

Revenue is coming in at a fraction of what was predicted. New Jersey forecast as much as $1 billion a year when Governor Chris Christie, a Republican, signed legislation authorizing online play last year. The monthly tally in April was $11.4 million, down from March. The state is one of three, including Nevada and Delaware, to allow casino-style bets online.

“The operators have not seen a positive response to their marketing campaigns,” Mattingley said, speaking broadly about the industry. “We’ve got to think again, the way we market.”

Six months after online betting started, some banks are refusing to process online gambling payments, according to Tom Ballance, chief operating officer of Borgata, a joint venture between Boyd and MGM Resorts International.

“It’s going to be a slower build,” Ballance said in an interview this week, adding the company is cutting back on marketing after spending initially to build awareness.

Rigorous Process

A rigorous signup process, to deter play by minors and people not physically present in the state, has also held back business, Ballance said. In addition, games aren’t available on some mobile devices, and betting in April was slowed by seasonal factors, with gamblers playing less online when daylight hours are longer.

“From a regulatory perspective, the systems are working as anticipated and we are encouraged by the operations,” Kerry Langan, a spokeswoman with New Jersey’s Division of Gaming Enforcement, said in an e-mailed statement.

New Jersey doesn’t let unlicensed third parties participate in the business, according to Mattingley. Such websites and other marketing partners provide as much as 30 percent of 888’s customer traffic in Europe, he said. The availability of illegal online gambling operators in the U.S. further reduces customer traffic, he said.

Mattingley anticipates licensing more games familiar to U.S. customers from slot-machine makers, such as International Game Technology Corp. (IGT:US) and Scientific Games Corp.’s WMS unit. 888 focused initially on building up poker.

“It’s not even in its infancy, it’s only just been born,” Mattingley said.

To contact the reporter on this story: Christopher Palmeri in Los Angeles at cpalmeri1@bloomberg.net

To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net Rob Golum, Ben Livesey


The Good Business Issue
LIMITED-TIME OFFER SUBSCRIBE NOW

Companies Mentioned

  • BYD
    (Boyd Gaming Corp)
    • $12.28 USD
    • 0.14
    • 1.14%
  • IGT
    (International Game Technology)
    • $17.09 USD
    • -0.05
    • -0.29%
Market data is delayed at least 15 minutes.
 
blog comments powered by Disqus