NJ Sports Betting Insiders Not Worried About Impact Of Incoming PA Market

atlantic city sports betting

For the past 18 months, Bruce Deifik has lived in Atlantic City, away from his home and family in Denver, Colo.

He recalled the winter months along the New Jersey shore, looking around the town, peering out at the ocean, a hot chocolate warming his hand as Atlantic City warmed his heart.

“It’s glorious, it’s amazing,” the Ocean Resort Casino owner said in a phone call recently. “And a lot of other towns don’t have that.”

For the past four months, New Jersey has also offered what no neighboring state (sans Delaware) can: regulated sports betting. It has become an added amenity to the Garden State. And for Atlantic City, NJ sports betting has only bolstered the town’s rising reputation as a tourist destination.

Yet Pennsylvania issued its first sports wagering certificates last week and is on the doorstep of opening its first sportsbooks. New York could potentially enter the fold in 2019. Could the strength of New Jersey — specifically Atlantic City — begin to wane?

For those with fingers on the pulse of the NJ sports betting industry, the answer is simply no.

NJ sports betting capitalizes on monopoly

Since launching in June, and while Pennsylvania and New York balked at activating their own industries, NJ sports betting has boomed.

Eight land-based sportsbooks have opened. Eight mobile and online products rolled out. In the first three reported months, NJ sports betting revenue has exceeded $16 million while taking in more than $136 million in handle during July and August.

Certainly, with the beginning of football season, numbers from September (which will become public Friday) will reflect yet another drastic increase in business.

Of course New Jersey residents, and politicians for that matter, long awaited a regulated industry. The state also benefited from its neighbors, Pennsylvania and New York, failing to get legal sports betting off the ground.

In June, Meadowlands Racetrack owner Jeff Gural offered a sentiment that surely speaks for other property owners and operators.

“New York did me such a favor by not passing sports betting. That leaves me the entirety of New York City, Long Island, Westchester County. There are 15 million people that live within 20 miles of the Meadowlands. They gave me a tremendous gift.”

In a recent interview with the Press of Atlantic CityMichael Pollock noted the significance of Pennsylvania tourists traveling to the Boardwalk.

“Pennsylvania, particularly eastern Pennsylvania, represents an important market for Atlantic City,” said the managing director for Spectrum Gaming Group, a consulting and research firm.

So the question becomes: With Pennsylvania about to launch its own sports betting industry, will it hurt Atlantic City casinos?

Insiders agree: AC will do just fine

After mentioning Pennsylvania’s prominent role in Atlantic City’s rise from the ashes, Pollock offered his take on the Keystone State rolling out sports betting and its impact on the New Jersey city.

Yes, Pennsylvania residents factored into Atlantic City’s rejuvenation, he said. “But I don’t think it will have a material impact on visitation (to the resort).”

“It’s also important to remember that the Atlantic City market has a strong following now,” Rummy Pandit, executive director of the Lloyd D. Levenson Institute of Gaming, Hospitality & Tourism at Stockton University said in a phone interview.

“There’s a strong loyalty-based program in every property. So those people that are already involved with individual properties at different levels of gaming, now that they find that these properties have sports betting as well, that’s an additional motivation to generate additional loyalty points for themselves.”

Proximity will continue to play a role, Deifik said. Manhattan, he noted, sits just a few hours away from Atlantic City. Philadelphia? A mere hour’s drive.

An AC casino owner’s perspective

To Deifik, the question for sports betting patrons becomes: Is there enough in Atlantic City to still lure out-of-staters to make the trip?

According to the Ocean Resort owner, yes indeed.

“Sports betting is a major addition to Atlantic City, and I think it will continue to be that. You can go to a single property somewhere else if they build a sportsbook there in Pennsylvania. … But you don’t have a lot of the options that you have in Atlantic City, so I think that our town will be the beneficiary of that.

“And we’re very excited about that. …Only time will tell, but we work 24 hours a day. They’re not going to outwork us. But geographically, they might have a customer that doesn’t want to drive that hour. And by the way, that’s fine. We hope you come another time.”

Taxes could also protect Atlantic City sports betting

Taxation on NJ sports betting revenue will change in December. Even so, the Garden State will still boast lower rates than Pennsylvania.

The change moves New Jersey tax rates to 9.75 percent for land-based sportsbooks and 14.25 percent for mobile. Cost for a five-year license runs sports betting operators $100,000.

Pennsylvania charges a whopping $10 million for licenses while cutting 36 percent from revenue.

That disparity, David Schwartz said via email, could help New Jersey continue to thrive.

“This could go two ways. First, availability in Pennsylvania might impinge on New Jersey’s market,” the director of the Center for Gaming Research at UNLV said. “On this other hand, if high taxes in PA make it hard for sportsbooks there to compete with the NJ ones, it might not have such a big impact.”

For several months, Pennsylvania’s lofty financial requirements caused potential sportsbook operations to hesitate. Now, though, three properties, including two in the Philadelphia area, have received licenses. Three others, two in Philly, will make presentations to the Pennsylvania Gaming Control Board at the end of the month.

The Pennsylvania market will soon open. Yet several experts familiar with the New Jersey industry are not worried about the impact. One of the biggest reasons why boils down to what AC is and hopes to be.

Atlantic City is a destination

Pandit conceded that the launch of Pennsylvania’s industry will, of course, take some revenue from New Jersey. Some. Not much.

“I don’t believe there will be a significant impact on the New Jersey revenue, primarily because we have a destination resort,” Pandit said. “And sports betting being a social activity, it’s not something you typically do in a silo. You’re involved with multiple different facets of a recreational activity, such as sports betting as well as food and beverage and entertainment and shows and a destination experience. Atlantic City provides that destination experience.”

Deifik echoes that sentiment. At his nearly four-month-old property, visitors have access to a variety of activities:

“What I’ve paid attention to is people coming to our place, and they’re excited about being in the sportsbook and excited to bet their teams and support their teams with groups of people. And while some people are betting, others are having something to eat, other people are going to Topgolf, other people are doing other things.”

Deifik added that whatever byproduct stems from Pennsylvania’s soon-to-go-live industry will only be a positive for Atlantic City.

“The press didn’t treat it properly when the closing of casinos happened. All of sudden, that was the town, the blight of the town,” Deifik said. “A lot of that’s getting cleaned up and businesses are coming back. And with the opening of Hard Rock and Ocean, everybody can see on our different major thoroughfares small mom-and-pops opening and small bodegas and beauty parlors or barbers or other businesses like that.

“It’s great for the town across the board. And the more that happens, the more some of the things that should be cleaned up and get cleaned up and the city starts to thrive again, I think people will come and say, ‘Not only can we bet sports there at some of the best sportsbooks in the country, not only is it an easy two-and-a-half (hours) from Manhattan and 55 minutes from Philadelphia and other parts of New Jersey and (Washington) D.C., but we have all the other things we can enjoy.'”

Sharing the sports betting love

Deifik hinted at potential partnership deals, for lack of a better description. Ocean Resort, for example, might be able to work with Pennsylvania properties by putting packages together for visitors traveling one direction or the other.

“Who knows?” he said. That’s just an example of Deifik “staying up to speed” with the competition rather than attempting to control the uncontrollable.

Loyalty is key for Atlantic City, Pandit said. And, combined with the city’s renaissance, it will help protect the town, and New Jersey, from out-of-state competition.

“It’s within close proximity of New York and Pennsylvania,” Pandit said of Atlantic City. “And that’s going to drive additional business, due to the fact that people want that destination experience, not just one singular play.”

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Grant Lucas

About

Grant Lucas is a longtime sportswriter who has covered high school, collegiate, and professional levels. A graduate of Linfield College in McMinnville, Grant now focuses his attention on the growing NJ online gambling and sports betting scene.