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05.02.2014

New Jersey Online Gaming Revenues to Fall Short of Expectations

After using the lure of a windfall from online gaming revenue taxation to gain its passage, the state of New Jersey is quickly realizing that there won’t be bounteous amounts of money flowing into the state’s coffers, at least for its first year.

Noted New Jersey gaming writer John Brennan of NorthJersey.com took a look at the latest reports for full online casino gaming in the Garden State and the numbers aren’t impressive. Tax revenues from online gaming in New Jersey totaled only $1.4 million for the month of January after the final six weeks of 2013 saw $8.4 million come into the state’s coffers. At the current rate, that would mean that tax revenues would fall far short (estimated between $10 and $20 million) of the projection of Governor Chris Christie’s administration.

As New Jersey prepared to open up online casino gaming last summer, Christie estimated that it would pull in $160 million in tax revenues in the first year of online gaming operation. That number was set on assumptions that New Jersey online gaming would draw in roughly $1.1 billion in total revenues, of which New Jersey would take a 15% cut ($160 million).


There is some backlash among legislators in New Jersey regarding the Christie administration’s estimations. New Jersey State Senator Ray Lesniak, who has long been a proponent of online casino gaming, stated to Brennan that he warned the Christie administration about overinflating the numbers with the first year of online gaming. The figures touted by the Christie administration had “no basis in reality,” Lesniak said to Brennan. “He (Christie) made numbers up out of thin air to help balance the state’s budget going into (his) reelection campaign,” Lesniak alleged.

The news isn’t entirely dismal for New Jersey online gaming’s future, according to Brennan. He points out that the Wells Fargo analysis that was used by the Christie administration does indeed see $1.5 billion in annual revenues, but not until the fifth year of its existence. In the first year, Wells Fargo projected that revenues would be between $650 million to $850 million; the resulting tax revenues from those numbers would be between $97 million and $127 million.

Brennan reports that, on Thursday, Fitch Ratings has projected revenues for the 2014 calendar year from New Jersey’s online gaming industry will fall between $200 to $300 million, which would translate out to $30 to $45 million in tax revenues for the state’s coffers.

 


 

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