How Will New Jersey Sportsbooks Fare After New York’s Launch Of Online Sports Betting?

Written By David Danzis on January 7, 2022

The forthcoming launch of online sports betting in New York will undoubtedly affect New Jersey sportsbooks.

On Thursday, the New York State Gaming Commission announced that four operators could begin accepting legal online sports bets at 9 a.m. Saturday.

Now, New Jersey sportsbooks are left to deal with how much money will stay in New York and how quickly will the shift happen?

It is a safe bet that New Jersey sportsbooks will lose a double-digit percentage of action and that it will happen quickly.

The NFL season wraps up this weekend and the playoffs are around the corner. The college football championship is set for Monday night.

In other words, the timing of New York’s foray into online sports betting is nearly perfect.

By the time March Madness begins, New York could have nine online sportsbooks.

But what does it all mean for New Jersey sportsbooks?

New Yorkers have been betting big with New Jersey sportsbooks

New Jersey sportsbooks have been offering online and mobile betting since summer 2018. Over that time, no state has seen more money gambled ($21.55 billion) or revenue generated ($1.55 billion) from sports betting.

Online sports betting routinely accounts for roughly 90% of monthly handle and revenue, according to state gaming regulators.

While no official data is available, sportsbook operators and industry analysts estimate that anywhere between 20% and 30% of the money bet with New Jersey sportsbooks is coming from New Yorkers crossing the state line to gamble.

In 2019, Eilers & Krejcik Gaming and GeoComply estimated that nearly $837 million of the $4.6 billion (18.2%) in sports bets placed in N.J. were from New York residents.

The reality is that other sports betting heavyweights, such as Nevada, Illinois and Pennsylvania, will very likely leapfrog New Jersey in 2022.

The regional sports betting pie isn’t shrinking, the slices are just moving to another table

But, will New Jersey sportsbooks actually be losing?

Seven of the nine operators approved for online sports betting in N.Y. are already live in N.J, including the “Big Four” of BetMGM, Caesars, DraftKings and FanDuel.

So, while some of the money gambled in N.J. will shift to N.Y., much of it will likely stay with operators customers are familiar with.

New York’s 51% tax rate on sports betting revenue is significantly higher than N.J.’s 13% (not including local 1.25% tax).

Sportsbooks operating in both states will likely try to sway players to bet in Jersey with promos and free play because of the tax rate difference. That may hook big bettors, but casual sports gamblers are more likely to opt for convenience and saving money on travel.

Trenton’s coffers will be getting lighter

That means the big loser here will be the State of New Jersey and the services funded by gaming taxes, such as senior programs and transportation.

Since June 2018, sports betting has generated more than $194.65 million in taxes for the state.

Through November of this year, online sports betting has generated almost $89 million in taxes. Land-based sports betting at Atlantic City casinos and the state’s three licensed racetracks added another $6.2 million.

More to the story than just New Jersey sportsbooks

The other variable here is the ripple effect on New Jersey online casinos.

Analysts and experts concur there is a direct correlation between the growth of N.J. iGaming and online sports betting.

Between the launch of online sports betting and the COVID-19 shutdown of Atlantic City casinos in 2020, iGaming in N.J. has exploded.

In 2021, online casino has generated over $1.23 billion in revenue and accounts for more than 30% of all gambling revenue reported by Atlantic City casino licensees.

The state of New Jersey has collected more than $185 million in taxes from iGaming revenue in 2021.

AP Photo/Kathy Willens

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David Danzis

David Danzis is the lead writer for PlayNJ. He is a New Jersey native and honors graduate of Rutgers University. As a newspaper reporter for the New Jersey Herald and Press of Atlantic City, David earned statewide awards for his coverage of politics, government, education, sports and business. Today, he is PlayNJ’s Atlantic City “insider” and gaming industry expert on casinos, sports betting and online gambling. David lives in Mays Landing with his wife and two children. When not on the beach, a golf course, or snowboarding, David enjoys watching his beloved New York sports teams — Yankees, Jets, Rangers and Knicks.

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