It's no wonder operator 5Dimes wants to enter the regulated sports betting market after years of offshore activity. Just look at the results being produced in New Jersey on a monthly basis, where a new record is broken with seemingly every new financial report. Back in September, black market brand 5Dimes reached a $46.8m settlement with the US Government, announcing its intentions to suspend US operations from 21 September and relaunch as a regulated sports wagering operator.
In a past issue of From the Top, we analysed the media’s role in not promoting offshore operators like 5Dimes, inspired by an open letter from American Gaming Association CEO Bill Miller. His main message was that if players are not educated about the nature of illegal operators, not only are players left at risk but there is less of an incentive for companies to follow the law. The media’s role is understandably an important one, especially when national outlets possess such a wide reach.
But another huge incentive for any business is, of course, profit. And November’s gaming figures for New Jersey offered perhaps the single biggest reason any offshore operator should turn to the regulated market. Sure, total gaming revenue was down to $288.9m, but only by 6% year-on-year, remarkable in itself considering Atlantic City casinos are operating at a restricted capacity. Online gaming win was $91.8m, almost doubling, while sports betting revenue was 9% up to $50.6m. Retail casino win was down 35% to $146.6m, showing just how much of the Garden State’s legwork is now being done by online wagering.
New Jersey is at a point when online gaming forms just under a third of revenue and sports betting (predominantly online) forms around 17%. For the year to date, New Jersey gaming’s $2.57bn generated – most of it during a global pandemic – is 19% down. But online gaming revenue is up 101% to $870.9m, with sports betting revenue sitting at $332.1m, 23% up. And that’s without even mentioning New Jersey’s incredible sports betting handle, which is what really shows off the strength of its regulated market.
In November, the Garden State very nearly saw $1bn in sports betting handle. In total, $931.6m was wagered on sports, with $872m of that coming digitally. For the year to date, $5.02bn has been bet on sport in New Jersey, and again it’s worth emphasizing this is in a year when a large share of sporting events were either postponed or cancelled. So why wouldn’t an offshore operator like 5Dimes be tempted into the regulated market when faced with a proposition like that? Crucially, these are numbers that will only grow with time.
While the illegal market is still taking the majority share in the US, it’s also clear New Jersey is getting something right as it sets the bar so high. As we’ll explore in our cover features this issue, it’s a model other states can follow. Analysts have long championed the theory behind New Jersey’s fair tax rate and gaming framework. Now, though, the numerical evidence backing up that theory is unequivocal, especially the tax dollars collected during a time when any government would grasp new sources of revenue with both hands.
Assessing individual properties, Fantini Research data shows that each Atlantic City online offering saw huge yearly uptake. Hard Rock and Borgata rose almost 200%, Resorts Digital was up 91%, Caesars and Ocean grew more than 70%, Tropicana 66% and Golden Nugget, generating the highest total, 37%. That revenue is incredibly timely when you consider all but one legacy casino saw table hold fall (only Hard Rock saw a 19% rise). Sports betting wise, all but three brands saw yearly growth: Resorts, Bally’s and Hard Rock. Yet these three all dealt with six-figure totals, so high percentage falls constituted small actual totals. Elsewhere, Borgata generated a 5% growth and everyone else enjoyed a double-digit increase. Meadowlands, which grew 67%, generated $24.8m with FanDuel and Resorts Digital, which grew 60%, amassed $14.6m with DraftKings.
What more of an invitation could ambitious brands need than the evidence of FanDuel and DraftKings’ success – even when all taxes and regulatory costs are added into the mix? For a long time, betting analysts have promoted New Jersey as a shining example of getting the legalization of online gaming and sports betting right. Never before have they been more vindicated, however, even if this is something they might have all foreseen.
Another question this raises is perhaps how many anti-gambling policymakers can be swayed by such statistics? States that haven’t yet embraced sports betting (fewer these days) and online gaming (still plenty) might find themselves feeling more persuaded during a global pandemic, when they see just how much legal business is being conducted in New Jersey. Other states, too, are seeing soaring numbers, although New Jersey’s regulatory mix – tax rate, convergence between land-based and online, support from the New Jersey Division of Gaming Enforcement – have made it the poster child of regulated US gaming since PASPA was overturned.
Perhaps the biggest indicator of a turning tide is in neighbouring New York, where Governor Andrew Cuomo recently spoke of sports betting in a more positive light than ever before. Kambi CEO Kristian Nylén once told Gaming America it was only a matter of time before mobile sports wagering landed in New York. That moment has still yet to arrive, with consistent opposition from lawmakers and namely Cuomo himself. And yet, with a torrid 2020 almost over, Cuomo uttered the words “how about sports betting?” when exploring how to create $15bn in revenue to shore up a widening deficit.
Naturally, this was far from a green light for lawmakers or sports betting campaigners. But from one of mobile wagering’s biggest opponents? It was significant. State governments considering legalization of online gaming and sports betting may still be unsure when it comes to responsible gambling, and that in itself is a whole new conversation. Thanks to New Jersey, though, they will be convinced of the pastime’s popularity, its tax-generating potential and that a fair regulatory framework is far more effective than a restrictive one. Records will continue to be broken.