According to renowned global rating agency Fitch Ratings, Governor Chris Christie exaggerated the potential revenues from online gambling by a huge margin.
Christie rather ambitiously estimated that the online gambling industry will reach $1.2 billion by next year. But Fitch anticipates that internet gaming revenue will reach $200 million to $300 million next year, and increasing up to $500 million to $750 million annually within several years.
The agency also doubts that an online gambling industry will pull Atlantic City out of financial turmoil. “Although some market participants will benefit, New Jersey online gambling is not going to be the saviour of the AC casino market,” the agency said in a release. “In some ways, it will be detrimental because it has kept brick and mortar supply in the market when the level of demand dictates that some supply should be removed. Annual AC gaming revenues have declined from more than $5 billion in 2006 to roughly $2.8 billion currently due largely to the development of neighbouring markets, yet the number of casinos has remained flat as Revel replaced Sands.”
The report by Fitch also predicts that online gambling in New Jersey might even disadvantage land-based casinos if people prefer solely to gamble online. Fitch also questioned the long-term benefits which online gambling is expected to have for the casino industry at large. “Although some market participants will benefit, New Jersey online gambling is not going to be the saviour of the casino market. In some ways, it will be detrimental because it has kept brick and mortar supply in the market when the level of demand dictates that some supply should be removed.”
The legalisation of online gambling was meant, in part, to save Atlantic City’s gaming industry which has declined by 44% since 2006. Online gambling was officially launched this week, and, despite some minor technical glitches, many people are optimistic about the potential of the online gambling industry.
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