Revenues are down, but hopes are still up

State Sen. Raymond Lesniak, a major online gaming proponent in the state Legislature, says the industry’s first year in New Jersey has been a “great success” — from a regulatory standpoint.

And indeed it has, as there have been few, if any, reports of underage or out-of-state use or of cyber breaches of any of the sites.

Revenues are another story.

“We all know that it has certainly underperformed, even by my conservative estimates as opposed to the governor’s unrealistic projections,” Lesniak said.

As the state heads to the one-year anniversary of the launch of Internet gaming later this month, industry experts say a few realities are clear:

• Gaming revenue will hit only about 10 percent of Gov. Chris Christie’s $1.2 billion projection;

• The online gaming industry will only grow significantly if certain payment processing issues are fixed and new marketing measures are undertaken.

State law limits Internet gaming licenses to the state’s brick-and-mortar casino operators, though the properties are permitted to partner with other online operators. Steve Scheinthal, executive vice president and general counsel for Landry’s Inc., the parent company for the Golden Nugget, said some of the issues are part of an expected learning curve.

“Whenever you’re in a startup technology business, you always have a lot of kinks to get worked out,” he said. “The first year had its trials and tribulations.”

But Scheinthal said that while in-house technology hurdles were quickly resolved through practice, the refusal by some banks and credit card companies to process payments remains a problem that has “impacted the size of the marketplace.”

Scheinthal hopes that, over time, and as the industry becomes more established, major credit card companies and banks that have been hesitant to embrace online gaming thus far will reverse course. Still, he said, it’s “significantly hurting us.”

That isn’t falling on deaf ears in the Legislature. Lesniak said efforts are underway to correct credit card payment processing issues.