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Will online gaming's success continue with casinos reopening?
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Will online gaming's success continue with casinos reopening?

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Atlantic County Girl Scout Cookie Entrepreneurs Learn Baking Tips from Hard Rock Hotel & Casino Atlantic City’s Executive Pastry Chef Thaddeus Dubois Thursday April 1 2021. The event is part of a partnership between GSCSNJ and Hard Rock Atlantic City. The resort destination announced their support of the GSCSNJ as a 2021 Cookie Angel. New for 2021, the Cookie Angel Program provides businesses and donors the opportunity to connect with local troops and support their cookie business during this challenging season due to the COVID-19 pandemic. Girl Scouts have had to get creative and shift to virtual sales this year because of restrictions that have prevented some of their typical cookie sale methods. Through the Cookie Angel Program, businesses are invited to purchase cookies virtually at different sponsorship levels and re-give the cookies to their customers, employees, or local organizations.

ATLANTIC CITY — When Atlantic City’s casinos shut down in mid-March 2020 because of the COVID-19 pandemic, the gaming industry all but completely stopped.

The only part of the industry still operational was online gaming.

With gamblers stuck at home, many of them decided to pick up their smartphones and tablets and take up online gaming, giving casino operators a desperately needed revenue boost.

While brick-and-mortar casino revenue dropped by nearly 44% to $1.5 billion in 2020 compared to 2019, internet gaming revenue increased by 101% to $970.3 million in 2020 compared to 2019.

The success of internet gaming over the past year and the revenue lifeline it provided to casino owners and the state has made some wonder whether it will cut into brick-and-mortar revenue in the long term as the COVID-19 pandemic wanes.

“At the start of the pandemic, people increasingly sought out ways to do things at home and online, not just for gambling, but almost everything,” said Dustin Gouker, lead analyst for PLAYNJ. “And online casinos were one of the benefactors of that trend, especially in New Jersey and Pennsylvania, where online casinos were already legal. That trend brought new customers that might not have found them otherwise.”

When Gov. Chris Christie signed internet gaming legislation into law in February 2013, it was touted as another option that would make the resort’s gaming market more competitive. Those against it claimed it would take away from brick-and-mortar casinos in the resort.

Since it has been legal, online gaming has become a key part of revenue for casinos.

But for 3½ months during the pandemic, online gaming was the only option.

“While insight into specific gambling behavior requires further investigation, we have definitely seen a shift in the gaming market overall. But, just because online gaming is particularly popular now, under pandemic conditions, does not mean that it will replace in-person gaming options when pandemic restrictions are finally lifted,” said Jane Bokunewicz, coordinator of Stockton University’s Lloyd D. Levenson Institute of Gaming, Hospitality and Tourism.

At Golden Nugget Atlantic City, online casino revenues increased by close to 65%, three times the growth they would have expected without the pandemic, said Warren Steven, vice president of Golden Nugget Online Gaming.

“This was due to an accelerated adoption of online gaming by casino players, meaning a higher number of new players, especially when casinos were closed, but also, with people staying at home and having fewer entertainment options than usual, players tended to increase their frequency of play for a few months, while some patrons who had stopped playing came back to play,” Steven said.

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During the state-mandated shutdown of the casinos, which lasted until early July, online gaming commercials filled television screens. The commercials touted the ease with which people could enjoy the casino gaming experience without getting dressed and heading to the resort, opening up the industry to a whole new group of customers.

“Atlantic City and its casinos endured their most challenging year in history — casino hotels were closed more than three months to mitigate the spread of the coronavirus,” said James T. Plousis, chairman of the state Casino Control Commission. “Internet gaming continued, generating revenue to sustain the businesses and provide critical funds for programs that aid New Jersey’s senior citizens and disabled residents.”

Online gaming offers most of the games casinos offer, including poker, blackjack, slots and roulette. There are also many live-dealer options to give players as realistic an experience as possible.

“We also knew, even pre-pandemic, that the online casino customer was often different from a physical casino visitor ... that they are not necessarily trading one for the other,” Gouker said.

But the success of online gaming during the pandemic could keep some people away if they don’t have a positive experience when they are able to return to the resort, said Jim Kennedy, a local economist and former executive director of the Casino Reinvestment Development Authority.

“Post COVID-19, a bad customer experience will result in a higher degree of business loss. Atlantic City is an indivisible part of the casino customer experience,” Kennedy said. “There now exists an overabundance in internet and regional casino competition prohibiting A.C. room for reasons not to visit.”

Bokunewicz believes online gaming will continue to play an important role in the casino industry, but it will not take away from the brick-and-mortar properties. A recent study from the gaming institute suggested people are more than willing to return to the resort as restrictions are lifted.

A survey released in early March showed more than 70% of the 805 people polled by LIGHT said they plan to visit Atlantic City within the next six months.

The survey showed more than 42% of respondents said they had visited the city at least once since the casinos reopened in July. The remaining respondents cited COVID-19 as the reason they didn’t visit.

“Last year was too much of an anomaly to use as a gauge of future behavior. In the 12-month period ending February 2020 before the pandemic hit, brick-and-mortar gaming was up year over year even with growth in internet gaming,” Bokunewicz said.

Steven said their data and surveys show brick-and-mortar casino players don’t reduce their casino visitation after they start playing online.

“We also think that, in casino states, online casino revenues will eventually be equivalent to 40% of brick-and-mortar casino revenues, and this 40% will essentially be incremental, not cannibalistic,” Steven said. “Online gaming competes with other forms of digital and home entertainment (Netflix, social casino, Candy Crush) for share of time on screen, not with brick-and-mortar casinos, which offer a more social experience that goes way beyond gambling.”

Even now, as capacity restrictions have been eased at casinos, online gaming has continued to grow, Gouker said.

“So the growth as things have opened up more is just a continuation of that trend. ... A lot of customers found online casinos and are sticking with it, while incremental growth continues,” he said.

Contact Nicholas Huba :

609-272-7046

nhuba@pressofac.com

Twitter @acpresshuba

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