Ever since last November, when New Jersey officially launched online poker, geolocation issues have been holding the market back. The geolocation technology, which is used to determine if players are within New Jersey’s borders, has prevented many legitimate NJ players from logging on, accessing real money tables and/or depositing.
Up until lately, the New Jersey Division of Gaming Enforcement (DGE) have refused to budge on the specifications for geolocation technology that poker sites must use. The DGE have taken a very conservative approach in the first few months to ensure that nobody outside the state is playing real money games. Thankfully, though, they’ve decided to lighten the geolocation restrictions.
When regulated online poker was first established in New Jersey, the DGE set up a fairly wide geolocation buffer zone at the state’s border to prevent out-of-state players from logging on. So now, the buffer has been shrunk to make it easier to locate players. Brian Mattingly, CEO of 888 Holdings, was pleased with how the DGE listened to poker operators’ plight and reduced the buffer zone. He added that this change has “significantly” improved geolocation accuracy.
The question now becomes if this fix will provide a big boost to New Jersey’s online poker sites. The state’s internet poker revenue has been lower than expected, with geolocation problems being blamed for much of this. Early December was especially bad, when it was reported that just 25% of players were able to log on and play real money games. This led to a disappointing $7.4 million in revenue for the state’s poker sites.
Since that time, geolocation has been significantly improved to the point where 95% of players within NJ borders are accepted. Gaming revenue has also improved, with the state earning $9.5 million in January and $10.3 million in February. However, the 5% who aren’t able to play are still hampering the market’s growth. So the ideal expectation of reducing the geolocation buffer zone is to move closer to 100% verification.
It’s difficult to put the effect of near-perfect verification into a revenue figure or percentage. But let’s just assume that 99% of players will now be able to log on and play at NJ internet poker rooms. All things being equal, this extra 4% would’ve added $412,000 to February revenue (10.3 million x 0.04) – resulting in over $10.7m in earnings, rather than $10.3m.
This may not sound like an enormous amount, but you also have to consider additional growth that would occur from the extra 4% not being rejected in future months too. In other words, consistent and working geolocation technology will lead to some level of exponential growth. So fixing geolocation issues could eventually add a collective million dollars or more in monthly revenue in future months.