30-second summary:
- New Jersey sports betting operators have for the first time had more revenues than Nevada operators in a month period
- Their sportsbooks had profits of $8.8m in January, in comparison with $14.6m in Nevada
- New Jersey is constantly hitting new highs and is targeting Nevada’s place at the top of the sports betting rankings
Record-breaking month
For many years New Jersey led the charge to end the federal ban on sports betting. Finally, in May 2018 the state got its wish following a Supreme Court vote. And in June the first sportsbooks in New Jersey were open for business.
Since then, there have been stronger results every month. New Jersey offers both online and offline sports betting, with many people coming across state lines to place their sports bets.
The king of the sports betting space in the US has long been Nevada. The capital of gambling has been able to offer legal sports betting for decades. Each month, New Jersey was getting closer and closer to the region, and finally it is on top.
In terms of actual revenue that New Jersey’s sportsbooks made January 2019, it was higher than that of Nevada for the first time ever in a month period. New Jersey’s record-breaking month saw it handle $385m worth of sports bets. From this sum, the sportsbook operators made a profit of $18.8m.
This compares with the $497m total sports betting handle in Nevada for January 2019. Its sportsbook operators had profits of just $14.6m. This was a hold rate of 2.9%, which pales in comparison with its hold rate of 7.8% in December 2018. The average hold rate for the state is around 4.8%.
Some point towards an overall decline in the total gambling revenues in Nevada as a reason for this drop in sports betting profits. The total revenues of $1bn in Nevada for casinos in January 2019 was a drop of 3% in comparison with January 2018.
New Jersey going from strength to strength
New Jersey had a fast start to 2019 with another record-breaking month in January. This was despite the fact that fewer football games took place during the month. Traditionally, football has been the number one sport for sports bets in the country.
One of the interesting trends for New Jersey is that more than 80% of the nearly $400m in sports bets were made online. People want to place bets from the comfort of their own homes rather than traveling to physical locations. This will make other states sit up and take note as they too push for legal online sports betting.
The jump in intake was significant month on month, going from $319m in December up to nearly $400m in January. Sportsbook operator revenues were slightly down from $21m in December to $18.8m in January.
The leading physical sportsbook in the state was Meadowlands, with physical revenues of $1.17m. Next in line were the Monmouth Park and the Borgata. In terms of online revenues, Resorts led the way with revenues of almost $7m, with Meadowlands having $5.85m in revenues and the Ocean Resort Casino under new ownership having revenues of $3.3m.
Usually, sports betting intakes in Nevada are higher in the last three months of the year, which is why setting a new record in January is also so impressive for New Jersey.
Potential hurdle
The one issue that is causing concern in New Jersey is the changing opinion of the Department of Justice (DOJ) on the 1961 Wire Act. The act lays out provisions for the gambling space. The DOJ gave its opinion in 2011 on how the act applies to online gambling. The only curtailment of online gambling at that time was for sports betting.
However, the DOJ has now changed its opinion. It now says that the Wire Act is applicable to all forms of online gambling. This, in theory, means that online gambling would not be legal unless there is a federal move to legalize it, as was seen with sports betting.
The DOJ put in place a 90-day deadline for operators to fall in line with this new stance. Many have worries that financial institutions will no longer want to process transactions relating to online gambling.
New Jersey has a significant gambling presence and wants to protect it in any way possible. The state is contemplating filing a lawsuit against the DOJ for its new opinion.
The New Jersey State Senate majority leader Steve Sweeney sent a letter to the DOJ in which he calls for the 2011 Wire Act opinion to be reinstated. If there is no response from the DOJ or the letter is met with hostility, then New Jersey will likely press on with its lawsuit.