New Jersey Revenue Report Shows Importance of Online Gaming

New Jersey Revenue Report Shows Importance of Online Gaming
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It should come as no surprise that the New Jersey gaming revenue numbers for September showed that the state’s sports betting industry produced record-breaking figures. Before the COVID-19 pandemic stopped much of life in its tracks, including the sports world, New Jersey sports wagering was picking up steam.

Now, just over two years after the U.S. Supreme Court wiped away the federal law that hobbled states other than Nevada from offering full-scale sports wagering, New Jersey sportsbooks have asserted themselves as No. 1 for sports betting.


CHECK OUT: State winners and losers of legal sports betting in last year


The state on Thursday reported $45.1 million in gross revenue for sports wagering off a handle of more than $748 million. That handle was an all-time record for Jersey. The old-time champ, Nevada, saw its high-water mark at $614 million in November 2019. As far as records are concerned, for now New Jersey is only in competition with itself (although Pennsylvania will be coming along soon).

However, beyond the headline of record-breaking nine-figure handle numbers is the more significant story the New Jersey numbers tell.

Taken together all online gambling in New Jersey — including sports wagering and casino games — amounted to a full 40% of a total of $323 million for the state’s total monthly revenue, which includes the Atlantic City casinos and the state’s race track sports revenues. In short, it could not have happened without online casino gaming.

For September, Jersey had a healthy increase in overall gaming revenue of 6.5% from the same month in 2019, according to the state report, but the brick-and-mortar revenues were down about 15%. The Atlantic City casinos, minus the racetrack sports revenues, had a 3% overall increase. Obviously, the brick-and-mortar drop was coronavirus-related, but the September numbers do show how vital online activity is to providing a cushion for gaming operators. They also point to a continuing change in customer behavior.

Admittedly, in considering the increased activity experienced in online gambling contrasted with live gambling, one has to factor in the pandemic. Atlantic City’s nine casinos closed down in mid-March and reopened in early July. Even after the casinos reopened, live experience amenities such as dining and entertainment were curtailed; indoor restaurants and bars just went back into service in September.

Capacity restrictions have been another drag on live revenue. And then there’s the immeasurable impact of customer reluctance to be in indoor spaces regardless of how conscientious the health and safety protocols employed by casinos.

The Importance of Online Gaming

However, the fact that Jersey casino revenues can bounce back to actually have an increase of 3% from September 2019 to September 2020 shows how important online gaming has already become.

On the customer side, there are gaming patrons currently playing online who wouldn’t have even tried the experience had it not been for the casino shutdowns. Those customers have now overcome the friction that an unfamiliar technology often poses and the likelihood is that they’ll continue to enjoy the online experience even after a full unfettered reopening of the casino industry. It’s a phenomenon we’ve already seen in retail shopping behavior.

In New Jersey, individual casino numbers show how some properties have been buoyed by Internet gambling.

The Borgata, the consistent revenue leader in Atlantic City, in large part due to its glamorous physical appeal, saw a 191% increase in online gaming revenue from about $7 million in September 2019 to more than $20 million in September 2020. That went a long way in erasing an approximately $17.7 million drop in bricks-and-mortar casino revenue. For the month, the Borgata saw just a modest drop in total revenue of 2.8%.

The Golden Nugget, which has enjoyed robust Internet action even before the pandemic, saw that momentum carry it to a healthy September. The Golden Nugget’s internet casino revenue jumped from $15.6 million in September 2019 to $26 million in September 2020. The casino floor was down about $4.75 million but overall, the Golden Nugget’s $37.6 million in September 2020 revenue was a 16.3% jump over the same month in 2019.

Unquestionably, online gaming has been a safety net that’s helped the New Jersey gaming industry deal with the impacts of a unique business catastrophe.

Nevada Needs Online Casino

Meanwhile, Nevada — which does not have online casino gaming other than poker (it does have online sports wagering) — is proportionally reeling even worse from COVID-19.


OP-ED: Why is Nevada so content to be left behind on online gaming?


The Nevada September revenue figures haven’t been released yet but August 2020 revenues showed a 22% decrease to $743 million from August 2019. In the same month, New Jersey revenues fell just 8%. It’s also fair to mention that employees who work in the brick-and-mortar gaming world of Atlantic City are similarly financially hurt as their counterparts in Las Vegas from the drastic slowdown in live customer traffic.

But in the New Jersey online financial numbers, and the evidence of the safety net Internet gambling has provided the industry and helped preserve tax revenues for the state, is a lesson for any jurisdiction wrestling with how to implement gambling.

Gamblers Like Online Sports Betting

Meanwhile, sports wagering is continuing to show that it has a strong hold on a broad swath of the public, whether those folks were previously mainly interested in other types of gaming, or were previously primarily sports fans, or are folks who fall into categories of overlapping interests. And what we are learning is that those sports gamblers, whether new or experienced, like doing it from the comfort of their computers or smart phones.

Of the nearly $749 million wagered on sports in New Jersey in September 2020, about 90% was done online. That 9-to-1 figure has been a steady ratio between online sports betting and retail sports wagering and it should only skew more toward online as in-play (meaning mid-event) betting gets more popular.

Parsing the numbers a bit more, while it’s a small sample size, the New Jersey September figures showed that the house win percentage was 9.6% overall. The hold percentage was smallest for football (3.4%) and the largest hold percentage was for parlays (23%).

Those figures should be instructive for sports bettors regarding about the wisdom — or lack thereof — of wagering on those big-reward, high-risk parlays. But like craps hard-ways, for some people, they’re apparently irresistible.

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