Placing the First Bet


Phil Murphy, the governor of New Jersey, placed the very first legal bet in his state in June 2018. He wagered $20 on Germany to host the 2018 World Cup, as well as on the New Jersey Devils to win the Stanley Cup in 2019. Ultimately, Murphy lost all his bets. However, New Jersey hit a historic and fruitful jackpot while he was governing it.

In May the previous year, New Jersey surpassed Nevada and thus became the leading state in sports gambling the first time in history. Namely, the state accumulated a whopping $318.9 million, plus $15.5 million. The former amount stands for the handle, i.e., the complete sum that bets take, whereas the latter represents the revenue, i.e., the sum that sportsbooks gather after paying out. As a comparison, the State of Nevada earned $317.3 million in handle, as well as $11.6 million in revenue.

The Rapid Growth

Apart from Nevada, New Jersey is among the seven states that legalized sports gambling on both professional and college games ever since the Supreme Court’s decision to abolish Nevada’s monopoly over sports betting that lasted almost 50 years. Sports gambling is among the favorite U.S. residents’ free-time activities. Namely, it is estimated that they spend an astonishing $150 million on bets every year both on the gray market and legal sportsbooks.

Several determinants impacted New Jersey’s brisk predominance, primarily its powerful casino and internet gambling business. However, it is too early to predict whether other states will accumulate similar amounts on authorized sports gambling. This free-time activity is an extraordinary income generator that might improve insufficiently funded education and schools, social services, and infrastructure, as well as other state projects.

The State of New Jersey has even founded a Casino Revenue Fund to advance the status of elderly and disabled citizens. What’s more, it is estimated that the great majority of states (80%) will legalize sports gambling by 2024.

40 States, the Year 2024

On May 14, 2018, SCOTUS unanimously decided to abolish PASPA (Professional and Amateur Sports Protection Act) enacted back in 1992. This act forbade betting on sports events in all states except Nevada. Thus, all legal sportsbooks were located in Las Vegas. Since then, 13 more countries have legalized sports betting or are in the process of legalization.

More than 20 states are considering legalizing sports betting or are preparing new acts to authorize it. Gambling Compliance declared that the end of 2019 will see a minimum of 35 states considering new bills related to sports betting. This further means that nearly half of the U.S. residents will inhabit the states that allowed some sort of sports gambling.

The turn of 2018 witnessed seven states (New Jersey, Mississippi, West Virginia, Delaware, Rhode Island, New Mexico, and Pennsylvania) legalizing sports gambling. In its yearly State of the States research, American Gaming Association revealed that this expansion added to the increase of income from regulated and authorized sports gambling to nearly $430.2 million last year, which is almost 65% more than $261.3 million two years ago.

The Revenue Growth

The termination of PASPA immediately led to the growth of sports gambling income in only six months’ time. Moreover, it will continue to grow rapidly in the years to come. Legal Sports Betting’s latest calculations indicate that, in 2019, sports gambling income exceeds $4.4 million in handle, as well as $259 million in revenue. Legal Sports Betting claims that ever since the abolition of PASPA, each authorized sportsbook (obliged to submit reports to their local states every month) has gained more than $8 billion. Over that period of time, sportsbooks have preserved over $500 million prior to giving away $60 million for taxes to their local states.

Gambling Compliance predicts that the worth of the authorized U.S. sports gambling market might amount to $7.9 billion in the complete yearly income by 2024.

Legal Catches

However, reaching that point may be a bit burdensome. Namely, the legislation of each state has to establish its own regulations and principles that will regulate both commercial and tribal casinos, state lottery peddlers and racetracks on-site, mobile and internet gambling. Furthermore, it needs to define authorization fees and tax tariffs that sports betting operators will have to pay. Also, some cases will require public polls or even constitutional amendments.

Accumulating the Income

An analysis that Associated Press conducted previous spring discovered that four states which have recently legalized sports gambling are lagging behind the expected amount of revenue. In spite of the eruption of competition throughout 2018, the State of Nevada still holds the record of $301 million accumulated from sports gambling, as opposed to recent seven states that accumulated $129.6 million in total. Starting from January 2019 through April the same year, sportsbooks in Nevada recorded $1.88 billion in handle, along with $104.6 million in revenue.

President of the Nevada Gaming Control Board, Sandra Douglass Morgan, stated that Nevada is still dominating the sports gambling market. The PASPA abolitions have not affected the State’s sports gambling business.

Even though New Jersey’s income for May exceeded Nevada’s, it needs to be explained that the states disclose their revenues in different ways. New Jersey figures involve wagers on events that are yet to come, like autumn’s World Series, prior to their being paid out. On the other hand, Nevada does not include wagers before they are cashed out.

Tax Rates

The precise amount of income gained from sports gambling operators that will eventually end up in the state’s treasury depends principally on tax tariffs. For instance, both Rhode Island and Delaware approximately tax 50% of the income that the operator generates every month. Pennsylvania taxes 34%, while Mississippi gathers 8% for the state and 4% for the local tax. New Jersey collects 8.5% from brick-and-mortar operators, along with 13% from mobile and internet platforms. Plus, the state imposes a 1.23% tax on every source on the pretext of Atlantic City advertising endeavors.

The State of Nevada that authorized gambling back in 1949 levies a tariff of 6.75% on all gambling activities. Even though each state in the country, apart from Utah and Hawaii, administer some sort of gambling, the State of Nevada is still the leader in the gambling industry. Moreover, it declared the income of $11.92 billion from casino gambling in 2018, which is 3% more than the previous year. Las Vegas contributed with the sum of $6.59 billion.

The Garden State’s Quick Win

Taking into account the Silver State’s event-based dominance, that trend might continue, particularly with excessive gambling during March Madness and the Super Bowl. However, the Garden State’s wisely established gambling industry is currently winning the sportsbook records.

Namely, the State initiated authorized land-based casino gambling back in 1978 in Atlantic City. 2013 saw the introduction of legalized online gambling. The State attempted to legalize sports gambling back in 2009 for the first time, under Governor Chris Christie. However, the attempt failed because four dominating sports leagues and NCAA brought charges, pointing out PASPA, along with the possibility of compromising the integrity of the games. A range of court disputes ultimately ended with the SCOTUS’s domination, and New Jersey returned to racing.

Launching Online Sports Gambling

The very first internet/mobile sportsbook in New Jersey ever was published in August 2018. Over 80% of wagers from the State were placed digitally, as published on Legal Sport Report’s webpage. Online sports gambling enabled residents of New York, New Jersey, and Pennsylvania to place their bets easily. Namely, bettors are able to register and deposit their money remotely. The reason Nevada refuses to take online sports gambling into account is the pressure imposed by local brick-and-mortar casinos. However, all the bettors who place their bets online have to be physically in the state.

Yet another factor affecting New Jersey’s growth in the employment of sports gambling apps, such as FanDuel Sportsbook or DraftKings Sportsbook, outgrows their gambling platforms for gambling on fantasy sports. Even though those platforms were incredibly popular among the gamblers, the transition went quite smoothly.

Meeting the Expectations

Of all the states that legalized sports gambling, only two were on a good way to meeting their expectations in terms of income — Delaware and New Jersey. The former had immense support from its long-functioning football betting game run by the state lottery. According to AP, West Virginia and Rhode Island, on the other hand, were making less than 25% of the monthly sum necessary to meet their expectations. The State of Mississippi was about to accumulate slightly more than 50% of the sum that officials foresaw. And when it comes to Pennsylvania, it was predicted that the state would achieve nearly two-thirds of the estimated income.

As a response, an executive of the Mississippi Gaming Commission, Allen Godfrey, declared that the commission did not predict the income, even though he reckons that Mississippi’s Department of Revenue established an expected criterion of $5 million. Godfrey forecasts that the tax income will amount to nearly $3.8 million in fiscal 2019. More importantly, the total income from gambling will reach nearly 5%, which is close to $42 million in terms of money. The increase in revenue would originate from sports gambling only.

The representative of the Department of Revenue Paul Grimaldi stated that Rhode Island hired business consultants to set the achievable initial prediction. However, he didn’t state the specific sum. He also added that the stated amount was attainable, according to the recent analysis, despite the market needing some time to mature. In the long end, sports gambling will generate new income both for the state and casino operators.

No Use of Analyzing Tax Expectations

Managing director of Eilers & Krejcik Gaming, Chris Grove, explained that sports gambling is low-margin produce. Therefore, it demands higher amounts of income. On the other hand, it is also high-volume produce, which indicates that there is a considerable demand for it.

Grove also added that there was no purpose of contrasting tax expectations with the gathering amounts. Sports gambling income constantly varies, and poor luck on a significant event like the Super Bowl might considerably disfigure returns. Legal sports gambling simply takes time, according to Grove. He estimates that it would take about four years for a state to reach the standard maturity stage.

The Burden of Compulsive Gambling

Sports gambling adversaries are concerned about the problem of compulsive gambling which may rise along with the increase in legal betting. The gambling industry usually donates $300 million to the initiatives related to responsible gaming all over the country. However, the donations are not consistent, and currently, there aren’t any programs that would establish liability.

The National Council on Problem Gambling based in Washington DC cooperate with both the state and country’s officials to design programs that will handle the problem of compulsive gambling. Keith Whyte, the executive director, worries about the increasing nonchalance of sports betting, especially on smartphones or tablets. He explained that the severity of compulsive gaming might increase unless combative measures are undertaken. He also added that some of the states launched excellent far-reaching programs, as opposed to those that did almost nothing.

Whyte further mentioned New Jersey as leading in the programs against compulsive gaming, unlike Mississippi and its insufficient state funds for fighting the gambling issue. He highlighted that the state’s regulations and systems are extremely poor as it does not devote money to preventing obsessive gaming. The Gaming Commission used to reserve $110,000 every year for Mississippi’s Council on Problem and Compulsive Gambling, but that practice ceased. Currently, the council must gather its own finances.

The Gambling Enthusiasm Prevails

Chris Grove predicts that gambling eagerness will not cease. He explains that nearly half of U.S. residents inhabit the states which will legalize some sort of sports betting by the turn of 2020. The main obstruction will be to make stakeholders agree on the most effective method to offer sports gambling, who will regulate it, and the way the income will be distributed.

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