AC's Relationship With Online Gambling

Atlantic City is synonymous with gambling, but the market was in dire straits before it embraced online gambling in 2013. But the tumult hasn't ended, and opinions on the health of AC gambling vary.

Aug 30, 2023

NEWS: What’s really going on in Atlantic City? Is online gambling the savior it’s made out to be?
NEWS: New Jersey is the 17th state to authorize online lottery sales.
NEWS: Ontario unveils its new online gambling advertising rules.
BEYOND the HEADLINE: Advertising is the new battlefront.
VIEWS: Touting tax revenue and jobs has helped sports betting legalization, but was that a short-term solution with long-term consequences?
AROUND the WATERCOOLER: Pro leagues take aim at illegal live streams. Old-school poker was a different animal.
STRAY THOUGHTS: Poker has the best stories.

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AC’s Goldilocks Zone

This entry was spurred by this article from David Danzis, one of the best Atlantic City reporters in the business, even if we don’t always see eye-to-eye.

For my money, Atlantic City is the most fascinating story in the history of gambling. The market never sits still and is a constant cycle between periods of boom and bust.

One of the more interesting aspects of opining on Atlantic City is your first exposure to the market greatly influences how you view the current iteration. I’ve spoken to people who were on the ground in the 70s who are in a constant state of what could have been. The people from the 80s and 90s have a different view as they view the present situation as fallout from past mistakes.

I started paying attention to Atlantic City post-2008 recession. I came in comparing a flailing AC to the boom years of the 2000s. My first experience was of a market not in decline but in decay from too many casinos and increased competition in surrounding states. The answer was clear to me: there are too many casinos (there still are), and the city needs to course-correct, part of which includes going all-in on online gambling.

People who started paying attention to Atlantic City post-2013 entered when the land-based market was contracting, and online gambling was a ticking timebomb about to explode. In their eyes, land-based and online are in a somewhat adversarial relationship.

When I covered Atlantic City deeply in the mid-2010s, I called the situation “right-sizing.” The casino closures are awful for the local economy, but you can’t make an omelet without breaking eggs. Atlantic City as a casino destination in 2023 (or even 2003) is a pipe dream. It needs more entertainment options to become a destination with gambling instead of a gambling destination.

Atlantic City can have casinos, but it needs to stop relying on them. Otherwise, it’s simply delaying the inevitable.

Here are a couple of previous columns I highly recommend reading that I’ve penned on Atlantic City over the years:

New Jersey Lotto Set to Offer Online Draw Tickets

Staying in New Jersey, the Garden State will begin offering online lottery draw game tickets in 2024 after the Lottery Commission approved the sale of draw tickets through the Lottery’s website - New Jerseans were already able to order draw game tickets online through the Jackpocket Lottery App (one of Straight to the Point’s sponsors).

New Jersey will be the 17th state with online lottery products, but as I mentioned last week, when North Carolina expanded its online lottery offerings, only ten states have legalized online instant win games.

“The Lottery believes that this increase was directly related to the introduction of online sales and by appealing to the next generation of lottery players,” the New Jersey Lottery said in a statement. “These new lottery players, primarily under the age of 40, who are more online, are essential to the long-term viability and success of the lottery.”

Online lottery sales do attract new customers, but the jury is out on whether they are indeed younger, let alone under 40.

According to a 2011 study, the average age of an online gambler is 45.7, compared to 51.2 for land-based gamblers.

Rob Wesley, the director of digital at the Virginia Lottery, told Jeffries University in April 2022 that “less than two years in... we [Virginia] have seen player shifts as far as demographics. It skews slightly younger online.”

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New Ad Rules in Ontario

The Alcohol and Gaming Commission of Ontario (AGCO) has released new rules around celebrity endorsers for online gambling sites.

In a press release, the AGCO stated:

“… the AGCO has determined that prohibiting the use of athletes and restricting celebrity endorsements would help safeguard children and youth who can be particularly susceptible to such advertising content.
“The amended standards will prohibit registered Ontario igaming operators from using athletes, whether active or retired, in igaming marketing and advertising, except for the exclusive purpose of advocating for responsible gambling practices. These amended standards also restrict the use of celebrities, role models, social media influencers, entertainers, cartoon figures, and symbols that “would likely be expected to appeal to minors”. This broadens and strengthens the existing standard that, prior to this change, prohibited the use of advertising and marketing content with a “primary appeal to minors.”

h/t to Gaming News Canada for putting this story on the radar.

Beyond the Headline: The New Front

Legal online gambling is winning, and its opponents have shifted their focus from stopping it to regulating it. The area they are having the most success is responsible gambling and, more specifically, advertising restrictions.

These policies don’t happen in isolation. The new rules in Ontario are likely to be replicated south of the border in the US, just as some of the more restrictive policies instituted in a US state tend to spread.

To be clear, I support many of these policies, but there are also many that go too far or have little impact (feel-good regulations) - and, in some cases, have the opposite effect.

Overpromise and Underdeliver

On Friday, William Allsup, Partner, Gaming Services Practice at RubinBrown posted the following on LinkedIn:

I have long told my friends in Government Relations for gaming companies that selling the legalization of gaming on bringing in more taxes and jobs is asking for a long-term headache. The taxes and jobs story might be enough to get the votes, but it is sure feels like poor strategic messaging.
[…]
If reports continue to point out how projections have not been met the takeaway could emerge that we need guarantees to get what we are promised. Would operators enter new markets if they owed something like a bond payment for the next 20 years to cover promised taxes? Are they willing to accept tax rates subject to adjustment every year to make sure projections are met?
In either case if the market doesn't work out for the operator, good luck quietly exiting without an uproar over the taxes and jobs you didn't provide.

This is an interesting assessment, and “guarantees” aren’t the only thing operators need to worry about. Ohio casually decided to double its sports betting tax rate this year, and several states have changed their promotional deduction policies after the fact.

Looking forward, the missed revenue and job numbers, coupled with the willingness to pay 50%+ tax rates in some locales, will not go unnoticed in future expansion talks.

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Around the Watercooler

Social media conversations, rumors, and gossip.

The NFL, NBA, and UFC have sent a letter to the US Patent and Trademark Office (USPTO), calling on the agency to “inject some urgency into the Digital Millennium Copyright Act (DMCA) to have the law shut down illegal livestreams sooner,” per The Verge.

The news has gone quite viral, as the below tweet has 7.7 million views and thousands of retweets.

90s poker was just built differently (from @RealKidPoker):

Early 90’s Hand History between Stu Ungar and Monsour Matloubi:
40k effective 200-400 blinds
Ungar 9hTs raises button to 1600 Matloubi calls 4c5d
Flop: 7s 3h 3d Check Bet 6000 Call
Turn Kc Check Check
River Qs Matloubi all in 2x pot 32,400 Ungar says, “You have 45 or 56” and makes the call with Ten high.

The HH led to a debate about cheating because what else would a social media post about poker turn into? But quite honestly, it’s stories like these (and those in the Stray Thoughts section below) that make poker, poker, and such a uniquely marketable form of gambling.

Stray Thoughts

For some more old-school poker and sports betting stories, I recommend the recent PokerNews Podcast featuring Poker and Sports Betting Hall Of Famer Billy Baxter.

And never forget one of the great gambling stories of all time relayed in Neil Gaiman’s American Gods:

“The finest line of poetry ever uttered in the history of this whole damn country was said by Canada Bill Jones in 1853, in Baton Rouge, while he was being robbed blind in a crooked game of faro. George Devol, who was, like Canada Bill, not a man who was averse to fleecing the odd sucker, drew Bill aside and asked him if he couldn't see that the game was crooked. And Canada Bill sighed, and shrugged his shoulders, and said, 'I know. But it's the only game in town.' And he went back to the game.”