New Jersey first allowed real money online poker in November 2013, and while the market has undergone changes over the course of the past five years, for now,...
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New Jersey first allowed real money online poker in November 2013, and while the market has undergone changes over the course of the past five years, for now, it stands as the most recent online poker market to launch in the US.

Currently the hub for online poker in the US, not only is New Jersey the most populated of the three states with an operating online poker market, but all the biggest online poker providers in America offer their services in the Garden State.

Now that the New Jersey Division of Gaming Enforcement has released revenue figures for the final month of 2018, we can put the year into perspective which can help gauge the health of online poker in the US.

In total, online poker providers in New Jersey collected $21.4 million in rake and tournament fees over the course of the year with approximately $3.2 million flowing into state coffers. Those figures represent the lowest level for any full year since the regulated online poker market opened in November 2013.

The previous low point for revenue occurred in 2015 with operators taking in $23.8 million, and though the addition of PokerStars to the market boosted revenue in 2016, the overall market has been in a state of decline since.

Shared Liquidity Provides a Boost

Though annual revenue hit its low point last year, there were also positive signs for online poker coming out of New Jersey.

Perhaps the most promising of all the highlights was the beginning of shared liquidity in New Jersey by WSOP.com and 888poker operating under the same license and both skins on the All American Poker Network (AAPN) network.

A month before the start of the World Series of Poker in Las Vegas, the New Jersey online poker rooms on the AAPN were allowed to join the shared player pool established by the AAPN in Nevada and Delaware.

The launch of shared liquidity in New Jersey was deemed “a monumental day for online poker in the United States” by WSOP.com’s Head of Online Poker Bill Rini.

Similar to the effect seen when PokerStars entered New Jersey, the advent of shared liquidity in the state (even if only on a single network) and the accompanying marketing campaign created a significant amount of excitement in the market as evidenced by the spike in traffic for the rooms operating under the Caesars license.

WSOP.com celebrated its increased liquidity with the Coast to Coast Classic, a $1 million guaranteed tournament series available to players in New Jersey and Nevada and a generous deposit bonus promotion.

The new larger player pool quadrupled the number of people eligible to play online poker during the World Series of Poker summer series, and as a result, organizers offered four online bracelet events, which for the first time, could be won by a player outside of the state of Nevada.

In fact, a player in New Jersey did prevail in Event #47 to become the first player to win a WSOP bracelet while in New Jersey.

The larger player pool generated more games, bigger prize pools and an increased interest in online poker by players in all three states, evidenced by rising revenue figures for online poker room operators on the AAPN in both New Jersey and Delaware. (Editor’s note: online poker revenue figures in Nevada are not publicly available for that period.)

As a result, during June the overall online poker market in New Jersey posted its first annual increase in over a year.

Revenue Continues to Fall for Other Operators

While the AAPN was enjoying the success of its shared liquidity, partypoker and PokerStars continued to see revenue figures in New Jersey decline. Though part of the deterioration can be attributed to cannibalization resulting from the success of their competitor, the trend of falling revenue figures in the state had been firmly entrenched before the AAPN’s new found success.

In fact, the only steady period of annual growth for the New Jersey online poker market occurred in the year following the debut of PokerStars in the market.

Even today, monthly revenue figures continue to post year-on-year declines for partypoker and PokerStars, while operators on the AAPN are still experiencing substantial growth as a result of shared liquidity.

Hope for Expanded Liquidity

Another highlight for New Jersey online poker last year occurred as the neighboring state of Pennsylvania moved methodically towards the opening of its own online poker market, bringing hopes to those operators still segregated in New Jersey.

Regulations were drafted and licenses to offer online poker in Pennsylvania were issued. And while the Pennsylvania Gaming Control Board (PGCB) would not commit publicly to allowing its operators to combine their Pennsylvania players with their players in other regulated states (like New Jersey), New Jersey Division of Gaming Enforcement (DGE) Director David Rebuck had previously commented publicly that his regulators were already in talks with their counterparts in Pennsylvania.

Shared liquidity with Pennsylvania would add nearly 13 million people to the overall population living in a state with legal, regulated online poker. Based on the success the AAPN experienced after adding 4 million in population to its potential player pool (3 million from Nevada and 1 million from Delaware), the addition of Pennsylvania stands as a true game changer for online poker in the US.

Not only are operators and players expected to benefit from the combining of the states through increased revenues and additional product availability respectively, but that success will likely raise interest by other states looking to add a new tax revenue stream.

Turn Card Freezes the Action

As 2018 drew to a close with Pennsylvania having yet to open its online poker card rooms, 2019 got off to a less-than-promising start. In January the US Department of Justice issued a new opinion on the Wire Act stating that it believes the 1961 law prohibits internet gaming that crosses state lines, effectively putting shred liquidity at risk in the US.

While AAPN has not ceased its interstate operations, the PGCB has informed its licensees that it expects them to abide by the new DOJ opinion.

Legal challenges are expected, but short of a favorable court decision for online poker, it would take a new overriding law from Congress to remove the dark cloud hanging over the US poker market in 2019.