New Jersey Is The Sports Betting Capital of The United States

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Hey Friends,

New Jersey has quietly become the sports betting capital of the United States.

Less than a month after the U.S. Supreme Court repealed the Professional and Amateur Sports Protection Act (PASPA) in 2018, paving the way for states to self-regulate retail & online sports betting, New Jersey signed Assembly Bill 4111 to legalize sports betting immediately.

Fast forward three years, and the results have been incredible.

New Jersey now regularly sees between $700 million to $900 million in monthly bets, despite COVID-19 dropping volume more than 90% for three months in 2020.

Even better, with $1.01 billion in wagers last month, New Jersey is the first state in U.S. sports betting history to pass the $1 billion in sports bets in a single month.

New Jersey Sports Betting Handle

• September 2021: $1.01 billion

• 2021 YTD: $7.14 billion

The September handle generated $82.4 million in sports betting revenue—a national monthly record—and 92% of bets were done outside of a physical sportsbook.

These results are great, of course. Legal sports betting is an industry that literally didn’t exist in the U.S. 3+ years ago, so scaling a new business to a $1 billion monthly handle and millions of individual bets within 36 months is quite the accomplishment.

The tax revenue is nice, too. After COVID-19 wrecked the state budget in New Jersey last year, a surge in online gambling ended up providing relief and bailing out the casino industry.

For example, New Jersey’s nine land-based casinos generated $1.5 billion in total gambling revenue last year, down 44% from the prior year. Still, the state ended up increasing its total tax collection due to the rise of sports betting—up 33% YoY to $398 million—and the higher tax rates that accompany it.

Keep in mind, traditional casinos are taxed at 8% of sales, while online games have a rate of 15%, and sports wagers are taxed at 8.5% if they are placed in casinos or 13% if placed online.

New Jersey Gambling Tax Rates

• Traditional Casinos: 8%

• Online Gaming: 15%

• Sports Betting In Casino: 8.5%

• Sports Betting Online: 13%

The point being, even with state-wide gambling revenue down last year due to COVID-19, New Jersey ended up increasing its tax collection due to the higher rate that online revenue provides.

NJ Taxes From Casinos, Racetracks & Online Gambling

• 2019: $300.4 million

• 2020: $302.7 million

It was always a matter of time before New Jersey overtook Nevada as the sports gambling capital of the United States. They have a significantly larger population—NJ has ~9 million residents to Nevada’s ~3 million—and mobile betting is still illegal in neighboring New York, a state with 20 million people.

Here’s a crazy stat: Gaming research firm Eilers & Krejcik estimates that New Yorkers wagered over $800 million in New Jersey during 2019, indicating that they control about 20% of the state’s overall handle.

If that percentage were to hold in 2021, New Yorkers would wager nearly $2 billion on sports in New Jersey — without the state of New York receiving a dime of the tax revenue.

But with New York expected to go live with mobile betting in early 2022, that is set to change. New Jersey had the first-mover advantage and capitalized on it. Still, I expect the adoption of sports betting in Pennslyvania and the eventual legalization of mobile betting in New York to cut into their monthly handles.

Regardless, the continued rise of the overall industry is fascinating to watch.

I hope everyone has a great day, and we’ll talk tomorrow.

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Huddle Up is a daily letter that breaks down the business and money behind sports.

Join more than 48,000 professional athletes, business executives, and casual sports fans that receive it directly in their inbox each morning — it’s free.