Live and direct: Why New Jersey operators are doubling down on live casino

In early February, David Rebuck, director of New Jersey’s Division of Gaming Enforcement (DGE), had just finished participating in a 45-minute panel discussion on US sports betting regulation at ICE in London. With a gap in his schedule, he took the opportunity to venture down from the conference rooms at ExCel London and onto the vast exhibition floor – divided into the 940,000 square-foot North and South event halls – and over to Evolution Gaming’s imposing, two-tier stand. Here, the former attorney was confronted by an array of screens streaming live HD casino games from the Nasdaq Stockholm-listed supplier’s state-of-the-art-studio complex in the Latvian capital of Riga.

An attentive Evolution Gaming representative then gave Rebuck a personal demonstration of a live blackjack game running on a 27-inch iMac. As the female dealer slid the oversized cards across the semicircle-shaped felt he seemed genuinely interested to hear about the live casino supplier’s history and progression since being established in 2006. Yet amid the small talk, Rebuck was possibly pondering to himself why live casino had largely been conspicuous by its absence in the Garden State despite the product exploding in popularity in much of Europe and Asia over last decade.  Practically every big, and not so big, name in the world of international online gambling offers live casino, while Evolution Gaming actually gained preliminary waiver approval for the New Jersey market back five years ago.

In fact, it took nearly three years after regulated egaming went live in November 2013 for Golden Nugget – and subsequently license partner Betfair – to roll out live dealer games in collaboration with supplier Ezugi from a purpose-built studio inside Golden Nugget’s Atlantic City property. This differentiation in an increasingly crowded market is one reason why Golden Nugget has put clear daylight between itself and the chasing pack in terms of GGR. In May, the Landry’s-owned business, which doesn’t offer web poker, racked up casino revenue of $8.6m – over $3m more than the revenue (casino and poker) generated by nearest rival Borgata.

Now, though, Golden Nugget and Betfair have competition after Borgata and license partners MGM and GVC-owned PartyCasino quietly launched a live dealer product (also operated by Ezugi) in April. Furthermore, Resorts Digital and 888 are poised to roll out live casino powered by Evolution Gaming this summer. Construction of studio for 888’s live offering is expected to be completed by the end of August and will boast 10 live tables serving up three-card poker and ‘Ultimate Texas Hold’em’ alongside the obligatory roulette and blackjack games.

Meanwhile, sometime in Q3, Evolution Gaming will stream live roulette from Resorts’ Atlantic City property for Evolution’s network of European licensees and for Resorts’ online players in New Jersey. So, game on. “New competition is a good thing and we welcome it,” states Golden Nugget’s online chief, Thomas Winter. This will push us and our partner, Ezugi, to innovate at a faster pace.”

In hindsight, then, perhaps Rebuck was surveying Evolution Gaming’s set-up to gauge what was in the pipeline for his state’s egaming sector. So why have the likes of Borgata, Resorts and 888 decided now is the right time to roll the dice with live products when Golden Nugget has had its live offering since August 2016? “We felt that it would be better to be late with a good product,” explains Yaniv Sherman, SVP of commercial development at 888. “It’s not poker where timing is everything and if you miss out on a market it is very hard to climb back up. Timing is not a critical component – we felt that product quality and the economics of anything we launch are more important than just being out there.” Moreover, he insists 888 didn’t want to do a “half-baked job” in New Jersey.

Speculate to accumulate

There is also no getting away from the fact that live casino isn’t a cheap product offering. Far from it. The studio set-ups are, for all intents and purposes, proper casinos kitted out with actual roulette, blackjack and baccarat tables manned by trained and smartly dressed dealers. To give the illusion of wagering in an actual upmarket casino, there are often elegant furnishings and additional aesthetics like oak panel-effect ‘walls’, false French doors and water features. There are also all the HD cameras and rigs, back- and front-end tech systems, game integrity monitoring and support staff to take into consideration.

Furthermore, New Jersey regulations stipulate that the infrastructure must be situated in an Atlantic City rather some far-flung offshore location, which is a costly arrangement. Indeed, the key reason why suppliers tend to base live studios in Eastern Europe and Asia is due to reduced outlays, particularly when it comes to manpower. “Our live casino studio for Europe is based in Riga where our operational costs are a lot lower,” says Paris Anatolitis, casino marketing manager for GVC.

“In New Jersey when you physically have to have tables on the ground and by law you have to employ dealers on minimum salary with unions and tips involved, that drives operational costs very high.” On top of this, the ability to scale in New Jersey is hamstrung by restricted capacity, he notes. “You can never have massive revenue on live blackjack unless you can have a large number of tables. With RNG you can scale because it’s all virtual. You can increase [live] revenues by introducing more tables but you are also massively increasing your operating costs.”

Without the scale and with it being an intrastate egaming market with a modest population of around six million adults, it’s not hard to see why operators and suppliers haven’t been in a hurry to launch live casino in New Jersey. When Golden Nugget first offered it, its live games were five times more expensive to operate than RNG games, although the operator has managed to reduce these costs by ramping up volumes. “As an average, the cost is now about 3x higher than RNG games,” says Winter. “For common draw games alone, it’s even getting closer to 2x. The addition of more brands, the influx of new male players with the launch of sports betting, and our recent launch of Unlimited Blackjack – the common draw version of the US’ most popular table game where players will be able to bet as low as $1 per hand – will further take costs down.”

Golden Nugget’s lowest minimum stake for regular blackjack is $10 on one of its seven blackjack tables. By comparison, the typical minimum stake in the UK is £5. Because the minimum bets are usually significantly higher than RNG, live players tend to wager more per hand than RNG and, therefore, they are often higher-value customers. “The cost of player acquisition is slightly higher for live casino players, but on the other hand, returns are higher,” says Björn Krantz, MD of North America market operations for NetEnt. “Average bets are higher, and sessions are longer on live compared to RNG.”

The trade-off is that live play is slower than digital products as the player doesn’t completely control the flow of play. And if there are seven players seated at a blackjack table, this will reduce the hands per hour even further. Also, there is the issue of online players sometimes not being able to secure a ‘seat’ at a full table during peak times. The ‘bet behind’ feature has been an innovative solution to this problem and increased revenue for operators, although wagering on another player’s hand doesn’t appeal to everyone.

These issues aside, Sherman, who oversaw the release of live casino for 888’s international markets back in 2009, insists live players tend to be particularly good customers. “If you treat them properly, live casino players tend to be more loyal. It’s a sticky product but they also expect a superb product experience.” He also underscores the importance of creating a branded experience: “We know that slots player are more loyal to the actual games than the operator; some [players] look for specific games and play them across different operators. With live casino, if you create a good customer experience then you are able to make it synonymous with your brands.”

A safe bet

While live tends to be a slower affair than traditional online gaming, players enjoy the authenticity of it, as well as being able to interact with the dealers. More importantly, many players view it as a more trustworthy product than a graphical simulation and a computer deciding the next card or where the ball will come to rest on a make-believe roulette wheel. “Some customers prefer live because they can actually see the outcome of the game rather than it being chosen by a random number generator, and that’s particularly prevalent with Asian customers,” says Ed Andrewes, a consultant for Resorts Digital.

In fact, in the Far East the appetite for realism fueled the rise of live dealer games from actual brick-and-mortar casinos. Cambodian casinos situated in dusty border towns stream live action to gamblers in China who play at web sites with addresses consisting of a jumble of letters and numbers in order to evade the authorities. And that merging of live and online play has also taken off in Europe and could be set to do the same in New Jersey. In March, Golden Nugget and Ezugi unveiled Live Floor Roulette in which online players at bet alongside patrons on the casino floor at the Atlantic City property.

Just like studio roulette, an unlimited number of online players can gamble at the same table. So far, Winter has been “pleasantly surprised” by the “immediate success” of the product, even if it has deprived the studio of play. “It cannibalized our studio roulette but, overall, the number of live roulette players has increased more than 25%, showing that Live Floor Roulette caters to a broader demographic, as we expected.” He continues: “It’s a bit slower than the studio roulette because of the time spent by players and dealers placing and removing chips, and you can’t interact with the dealer through live chat. On the flipside, this is the most authentic and lively experience an online casino can offer, which explains its popularity.”

The upcoming Resorts set-up powered by Evolution Gaming – dubbed ‘Dual Play’ – will include a five-camera installation with a customised rig and large screens above the roulette table. “Those screens will feature the live game feed from the table and promotional messaging designed to engage with visiting patrons,” explains James Stern, Evolution Gaming’s director of land-based and business development.

For example, the screens could remind patrons that they can play on that table anywhere in the state on desktop or mobile. For those playing online, Dual Play “gives online players a sense of being in the casino itself and soaking up the atmosphere,” Stern adds. “And rather than deter land-based players from taking a seat at the Dual Play table, the rig and camera set-up consistently draws on-premise players to these tables.”

Open all hours

Another bonus is that this form of live roulette runs around the clock. With live studio casino there simply isn’t the demand in New Jersey to keep tables open 24 hours a day. Borgata, MGM and PartyCasino operate between 2pm and 3am Monday to Wednesday, and from noon to 3am Thursday to Sunday. Golden Nugget’s live casino is open 15 hours a day, yet Winter has spoken in the past of his desire to increase play to 18 hours a day and possibly 24/7 if there is enough demand. At peak times, Golden Nugget currently boasts 12 tables: seven classic blackjack tables, two roulette tables, and one table each for casino hold’em, baccarat and Unlimited BlackJack.

Evolution Gaming and 888 are pledging to have live running for 16 hours a day, seven days a week, which would be a bold move straight out of the gate. While Evolution Gaming refuses to disclose which casino will house the studio, it would make sense for this to be a Caesars-owned property seeing as 888 is a B2B and B2C partner of the casino group. This would indicate the Caesars and/or Harrah’s online brands could be next to launch live dealer. “The current New Jersey market is probably big enough for two studios from a revenue standpoint,” says Winter, “otherwise Golden Nugget live dealer revenues would have suffered when other brands [Borgata, MGM, PartyCasino] started operating from our studio, which was not the case.”

Naturally, suppliers and operators still have to weigh up whether the potential ROI justifies the costs in a market slightly smaller than Portugal in terms of population. Stern says: “Launching live casino in a new territory can require significant investment in terms of a dedicated studio and supporting operational infrastructure and resources. That is very much the case in the US, whereas in Europe we can often launch in a new market by utilising existing central studio resources and infrastructure.” Even so, is Winter surprised other brands didn’t roll out live products sooner? “Not really,” he responds. “It required some faith to launch live dealer two years ago, given the cost and New Jersey market size. Most brands had a wait-and-see approach, plus some were not comfortable offering live dealer from a studio located in a competitor’s casino.”

According to DGE data, Borgata and its partners recorded their best-ever month in May for casino with GGR of $4,138,693. This followed casino revenue of $4,076,624 in April, which was also a record month for the brands. Whether these figures were purely down to live casino or PartyCasino’s recent makeover and relaunch as a standalone site, it’s difficult to tell. But Live dealer must have had a positive impact even if it was an understated launch. When Golden Nugget unleashed live in August 2016, it coincided with the milestone moment when the operator took the overall lead in New Jersey and went on to leave rivals choking on its exhaust fumes. This product differentiator helped drive this lead and Golden Nugget scooping four categories at this year’s EGR North America Awards, including Operator of the Year for the second year running.

While most operators have been reluctant to take a gamble on live dealer, despite the casino vertical now accounting for over 90% of regulated egaming in New Jersey, the live segment is heating up nicely in 2018. Live isn’t going to completely replace RNG gaming, which particularly suits short bursts of play and for those who prefer to gamble at micro-stakes levels, but those brands without a live tab in their product suite could be missing out on an attractive revenue stream generated by high-value players. And with mobile live casino now almost on a par with the desktop user experience (more than half of all live play on 888’s international site is now via mobile devices), it is a product that seems set to finally make a big splash in the Garden State. Better late than never, as Rebuck would probably attest.