As an early adopter of digital gambling, New Jersey has been at, or near, the forefront of both online casino and mobile sports betting in the United States.
In the last two years, however, NJ relinquished its (short-lived) claim as the national leader for legal sports betting and, more recently, gave up its yearslong reign as the country’s largest legal online casino market. In each instance, a neighboring state overtook New Jersey.
This begs an obvious question now that New York’s prospect of legalizing online casinos in the near future is among the best bets in the business: Will online casinos in NY have an adverse effect on NJ online casinos?
History and math suggest that the most obvious answer is the correct one. Yes, there will be a decline in NJ online casino volume if (when) the Empire State eventually permits online gambling.
But not as much as one may think.
Tales of NJ sports betting demise greatly exaggerated
New York easily surpassed the Garden State in terms of national sports betting supremacy when it introduced mobile wagering in January 2022. Before that, New Jersey, which launched online sportsbooks in summer 2018, had enjoyed a multi-year run as the top dog in legal US sports gambling.
All the factors that made NJ a legal sports gambling powerhouse — namely, tech-proficient and sports-obsessed residents with disposable income — existed in New York. It also didn’t hurt that NY has nearly twice the population of Jersey.
New York’s emergence as the largest legal sports gambling market was expected. For months leading up to the launch, industry experts offered up predictions on how much money NJ sportsbooks would lose when NY finally entered the game.
But, in the year-and-a-half since New York first went live with online sports betting, most of those projections have been proven to be way off. Unsurprisingly, people who don’t live in or near the greater NYC area put way too much stock into sensationalized media coverage of border-hopping New Yorkers traveling to Jersey to place mobile bets.
NJ is still a billion-dollar market
New Jersey was the first state to record $1 billion or more in handle (total amount wagered) from legal sports betting in September 2021.
It was thought that the monthly milestone would be a rare occurrence for NJ once New York went live. Yet NJ sportsbooks reported a handle of $1 billion or more in seven months since the start of 2022 and eclipsed the $900-million mark in two other months.
So, while New York may have taken some of the shine off NJ’s legal sports betting market, it surely hasn’t caused widespread panic in Trenton or Atlantic City.
Challengers to the iGaming crown
The online casino industry is an entirely different animal than sports betting. The seasonality of sports and the provincial nature of sports gambling does not exist with online slots or table games.
And internet gambling is decidedly less appealing to the public at large than putting a few bucks down on a sporting event. Only seven states have any form of legal internet casino gambling.
Pennsylvania, the state that supplanted NJ as the online casino leader, took its time with its gambling expansion. By the time the Keystone State launched its first online casino in 2019, NJ was nearing its sixth anniversary.
In May 2022, Pennsylvania passed NJ online casino revenue for the first time. In the 15 months since, monthly online casino revenue in PA has been higher than in NJ in all but two months.
Michigan expanded much more quickly after launching in January 2021. It overtook NJ in monthly iGaming revenue in December 2022. Michigan’s online casinos have outperformed New Jersey in six of the eight months in 2023.
Despite competition, NJ online gambling still going up
However, the shift atop the online casino leaderboard has not been due to underperformance in New Jersey. Pennsylvania and Michigan are simply doing better.
New Jersey was the first state to ever record $100 million or more in online gambling revenue in January 2021. Pennsylvania’s first $100 million-plus month was March 2021. Michigan cleared the hurdle that September.
All three states are routinely reporting in excess of $140 million of monthly online casino revenue in 2023.
As NJ approaches 10 years of legal online casinos this November, the segment is still growing, according to public data. Year-to-date, online casinos have netted more than $1.24 billion in revenue, 14.6% higher than at the same point last year.