Betfair has been well-known in the online gambling industry since its inception. However, the legislation associated to online poker (and gambling) across the U.S. and many other countries has had a big impact on the success of Betfair’s revenue and options. The company was set to team up with Trump Plaza, a New Jersey casino, but it has recently been revealed that this casino is set to close.
Operating an Online Gaming Site in New Jersey
New Jersey has always been a popular place to gamble, which is why it’s one of the main centers of attention in the battle for online poker legislation in the U.S.
Due to recent legislature, online gambling sites must currently hold an Internet gaming permit (IGP) in order to operate legally. The problem, however, is that only land-based casinos are eligible to apply and receive an IGP. The solution that online gaming sites have to employ is to partner with existing casinos and work out a licensing deal.
Originally there were 12 casinos that were permitted to apply for an IGP in 2013, the year the legislature was passed. This number has already been drastically cut down in 2014, projected to be at only seven casinos by the end of the year. The limited amount of casinos in the state compound the problem for Betfair.
With the closure of Trump Plaza and its casino, Betfair now needs to find a new partner if they want to continue operating in New Jersey. Given the overall presence of Betfair in the state, along with how much money they have invested, it’s likely the Betfair will attempt to find a new ally. However, this may not be easy or feasable.
The company has several obstacles in its way now. There are no casinos left, of those seven that have not paired with online gambling sites or are. Of these casinos, most have no incentive to enter a partnership with Betfair, as they already have significant exposure for their brand. Considering that Betfair’s main asset in this situation is their brand recognition, it is unlikely they will want to operate under a different name.
On top of these challenges, Betfair hasn’t had great success in New Jersey so far. For this year, they have achieved a revenue of $3.6mm, which may sound impressive, but is actually the worst in the New Jersey iGaming industy.
With very few options and not being able to bring too much to the table, Betfair may have to pay exorbitant licensing fees to potential suitors in order to continue operating. That being said, there is still room for growth in New Jersey’s poker and gambling industry, so future earning projections may make a deal that is difficult in the short term a good long term decision for the gaming giant.