At the end of last week, the New Jersey Assembly Tourism, Gaming, and the Arts committee held a hearing to discuss a new regulation, ACR 186.
As part of the evidence presented to the committee, the director of the Division of Gaming Enforcement (DGE), David Rebuck, presented a summary of NJ sports betting and a view of how the industry would unfold over the next year.
In short, Rebuck was confident that New Jersey is leading the pack with regulated sports betting and could challenge Nevada for the crown.
But the full extent of the discussion revealed some interesting details about sports betting in New Jersey.
NJ sports betting off to a flying start
Committee Chairman Ralph Caputo’s introductory statement referred to reports that “sports betting is soaring in the state of New Jersey.”
Rebuck’s evidence backed up this assessment and predicted that there was still a lot of growth to come.
He pointed to revenue figures for August: “$95 million, [and] we’re going to do a lot better.”
Rebuck explained that the highest sports betting revenues in Nevada came from basketball, the NFL, and NBA games. The August revenue figures only included “two weeks of basketball and one week of NFL wagering. NBA has not even commenced operations.”
On top of that, Rebuck reminded the committee that July and August are the slowest months for Nevada sports betting, so he expected numbers to increase substantially.
More licensees will join the sports betting competition
New Jersey law allows for 14 licenses for live sports betting and so far only eight have applied. Those include Atlantic City casinos and NJ racetracks.
“I do believe that not all 14 will apply ultimately for a license, but that’s their business decision.”
The picture is even stronger in online sports betting for the Garden State.
“We have no more applications available for us to look at today. There will be a lot more because there is substantial interest.”
Casinos and racetracks hit the jackpot on sports betting
Rebuck went out of his way to say that this certainly wouldn’t be the case in New Jersey:
“One of the key elements of your legislation that allows for it to be a strong robust market, is that you wisely gave veto power to the 14 licensees. Only they can control the partnerships of companies and entities that want to have mobile wagering in New Jersey. They’re in a very strong position of negotiating what they need and what they want for their business operations.”
Early opponents of US online gambling worried about cannibalizing casino and racetrack revenues. In fact, some opponents still raise this issue even though it has been debunked.
Rebuck explained how New Jersey casinos benefit from NJ online gambling:
“It gives them a nice cushion for diversifying their offerings, it gives them the ability to interact with a new customer base. It diversifies their product offering and it helps them through slow times, particularly when you have bad weather days. I can assure you, when there are bad weather days in New Jersey and people don’t want to travel, our internet numbers go up substantially.”
And the racetracks, Monmouth Park and Meadowlands, have not been left out. Rebuck added:
“Clearly the racetracks are very familiar with internet gambling on horse racing, so they’re in a very good position to expand their market into the sports wagering, non-horse racing sports wagering element.”
Can New Jersey really challenge Nevada?
Let’s recall that Nevada was the only state to offer sports betting during the period when PASPA prevented other states from competing.
The advantages that Las Vegas has are likely to be the driver for New Jersey to compete. Rebuck told the committee:
“This business technology, this new commercial venture, we will do better than Nevada does, because we have to. Nevada’s a different market than we are in New Jersey. We are less a destination market than Nevada. Most of the people that visit Nevada, visit Las Vegas, stay in a hotel in Las Vegas.”
Rebuck qualified his remarks:
“That may seem arrogant. Will we ever catch Nevada? I really don’t know, but I can tell you this, that I have already seen that Nevada’s board in July, reacted to what we’ve done, and it’s having special committee hearings to determine what steps they need to take to be competitive in sports wagering as other states in the US move forward and do things differently.”
Either way, it does seem clear that New Jersey is, in regulatory terms, already able to compete as equals with Nevada. In some ways, New Jersey has already gone ahead — Nevada doesn’t allow online casinos, which have been a huge revenue earner for New Jersey.
“This is a great opportunity for this state to be a leader in the US. I know this because I get calls constantly from other states… wanting to know what they have to do to get sports wagering up and operational.”
The sports betting black market threat
One of the issues that concern politicians considering sports betting regulation is that of integrity. At heart is the possibility that legal sports betting will incentivize match fixing or other ways of defrauding betting operators and their customers.
This issue is closely allied to the problem of attracting players from the black market or offshore sports betting sites, which have been operating outside of US law.
Rebuck says that this is an issue that the DGE takes very seriously.
The DGE has been working widely with law enforcement agencies and other regulators to fight the offshore operators:
“We’ve been researching this with our law enforcement partners to get a better understanding of how they operate in the United States … At this point in time, we’ve identified over 108 illegal websites that take sports wagers from every state in the United States today. They’re very good at what they do.”
The integrity issue is also high up on his priority list:
“We’ve already contacted the leagues. I’ve met with the NFL, I’ve met with the PGA [Tour]. We’ve begun our dialogue on how we will work together to share information when we have suspicious or unusual activity on their events.”
Rebuck gave an example of how that is working:
“Yes, we have had issues that have not impacted any of the leagues, but we are aware of notices that came to us from an event at Wimbledon, as well as an event at the US Open that were identified — tennis — as suspicious.”
Suspicious incidents don’t necessarily imply that something illegal is going on. As Rebuck explained:
“Just because a matter is unusual or suspicious, it doesn’t mean there is an integrity issue.”
Nevertheless, he warned the offshore operators that the DGE would be closely monitoring them:
“OK … remember what I said about the illegal sites? They better have a very strong system in play already, because the illegal sites are bigger than we are. We have good dialogue with the gaming operators for integrity, and we’ve already shared information.”
A lull before the storm
Seven US states have passed sports betting legislation (Nevada included), but Rebuck told the committee that he believes that there will now be a pause before any more legislation is passed.
The midterm elections have taken political attention away from expanding gambling legislation. But after that, there will be a lot more action.
Rebuck suggests that there will be a “tremendous uptick,” the size of which will depend on how NJ sports betting “performs in the next four months.”
If things go awry in New Jersey, other states may think twice before following their example in which case, “we might not have too much competition,” Rebuck jokingly told the committee.
The way the sports betting rollout in New Jersey has been handled so far is hard to fault. Rebuck is probably more responsible than any other single individual for this success, a fact that the committee rightly recognized.