A new era for New Jersey begins today.
Monmouth Park and Borgata Atlantic City will open their doors to accept the first legal sports bets in NJ on Thursday. More AC casinos and racetracks will follow thereafter.
A month to the day after the US Supreme Court struck down the Professional and Amateur Sports Protection Act, the Garden State will dive into the single-game wagering industry. Anticipation and excitement have climaxed, but one uncertainty remains.
Just how big will NJ sports betting be?
First, a look at the nation
As a whole, according to David Schwartz, each state’s market size and success “depends on which states legalize (sports betting) and what the regulations look like when they roll it out.”
Schwartz, director of the Center for Gaming Research at UNLV, said that maximizing the market begins with reasonable tax rates on sports betting revenue that would be enticing for racetracks, casinos, and sportsbooks to get involved.
In New Jersey, for example, land-based sportsbooks will have their revenue taxed at 8.5 percent. Online revenue will be taxed at 13 percent. Casinos will pay an additional 2.5 percent tax on wagers. Racetracks will be required to pay an additional 1.25 percent from online and mobile wagers. All legal US sports bets are subject to a federal excise tax of 0.25 percent of handle.
A Morning Consult online survey, which began five days after the SCOTUS ruling on May 14, found that one in five people showed interest in wagering on sports in their respective states once sports betting is legalized. Another survey, conducted by Deep Root Analytics that covered more than 2,100 people, indicated that 13 percent of respondents were likely to place a bet while another 14 percent were unsure.
Consider, though, that a report from Eilers & Krejcik Gaming in September 2017 said that 32 states will have legalized sports betting by 2023.
What about New Jersey?
Dennis Drazin, president and CEO of Monmouth Park, estimated that the racetrack could rake in upwards of $20 million annually from regulated NJ sports betting.
“I think there will be a healthy appetite and I think it’s going to grow,” Drazin told Asbury Park Press this week. “I think that we’ve been in the limelight with this for so long that the Monmouth Park brand is strong and people associate Monmouth Park with sports betting. And I think we are going to get an initial push from people who have just been dying to bet. And initially, we’re not competing with casinos or racetracks.’’
Boston College professor Richard McGowan projected $1.3 billion to be wagered annually to create a net profit of $68 million. That total could swell significantly after 30 days, McGowan said, as at that time online sports betting will become available.
“The real key will be when states start to put it online and start competing with each other,’’ McGowan said. “That’s when the market is going to explode. Around 70 percent of all the money that is bet online is sports betting.’’
Eilers & Krejcik forecasted several potential outcomes for New Jersey:
- Modeled on Nevada’s land-based locals sports betting market: $251 million.
- Modeled on Nevada’s land-based and online betting market: $324 million.
- Modeled on Nevada’s land-based and UK’s online betting market: $502 million.
So, what can NJ expect?
Obviously projecting what could happen in New Jersey is like blindly throwing darts at a board. Only time will tell.
That said, per the NJ law, each eligible property can operate up to three sports betting brands. With nine casinos and four racetracks, that adds up to 39 sportsbooks. More likely, each property will have a physical sports book and 1-3 online skins.
With many potential sports betting options combined with its relatively large population, the Garden State could see a large rake from sports betting.
“There’s a lot of people in the state. I think there’s nine million or so people in the state,” Schwartz said. “So the potential is there for the market to be pretty big. … What we saw in Delaware [which legalized sports betting last week] was respectable when they rolled it out. I don’t think it’s going to fundamentally change the nature of humanity. But it certainly has the potential to be a fairly big thing.”