Analysts that have looked into the projections of the New Jersey sports betting industry have acknowledged success in the industry, but with a hitch. There are solid projections for the future of the industry in the Garden State and elsewhere across the United States.
However, there are no figures that have shown how much of the New Jersey sports betting handle of $5 billion was from New York residents coming to New Jersey to make sports bets considering mobile and online sports betting is not legal in that state.
Morgan Stanley came up with a figure that for each resident of New Jersey, even those that do not gamble, there is per capita betting revenue of $36. This brings optimism, and Morgan Stanley stated it is “the best comparable for market potential” of the entire U.S.
However, they also acknowledged the New York wagering issue for the possible inflated figures for sports betting in New Jersey.
There have been increased revenue figures since there is a higher-hold percentage for sportsbooks not in Nevada, to the tune of five to six percent, that has usually been the case. It may be the case that the hold percentages may decrease when Super Bowl future wagers are paid out or if players that are new to the sports betting scene gain more experience in wagering.
The Tax Issue
Besides the drawback for online operators of the overall revenue, the tax rates may increase as well. The report from Morgan Stanley stated that the current “blended tax rate” in the figure of 15.1 percent across differing jurisdictions may end up being a figure of around 17.5 percent.
This is because new states that legalize sports betting have not seen any harm to that industry in the state of Pennsylvania, which has a high tax rate of 36 percent.
James Kilsby, who is the Gambling Compliance Managing Director, has stated that it would not be surprising for states that have online sportsbooks have on the books new legislation to change the tax rates. This based on what has happened in the European sports betting market.
Kilsby stated, “There has been a trend of governments increasing the taxes three or four or five years down the road. More often than not, when tax rates change, they go up.”
There have not only been issues for tax rates, but if new states that legalize sports betting have a significant population, such as Ohio and California, or less populated states, which would have a much smaller effect on the overall sports betting revenue.
Gambling Compliance has the expectation that five to 10 states will legalize sports wagering in 2020, but it cannot predict which states will do that, according to Kilsby.
Whatever states do legalize sports betting this year will probably know more about their potential for revenue than Rhode Island did. That state was in a 2019 story from the Associated Press, where it overestimated, by a significant figure, how much money its tax coffers would increase from sports betting and how fast it would happen.
Not only that, but its revenue took a big hit considering most of the bettors in Rhode Island wagered on the New England Patriots to win the Super Bowl, which they did.
New states that look to legalize sports betting can look at the blueprint that other states have followed when they legalized it. However, there is a lot of optimism considering how states have financially benefited from sports wagering. Kilsby said it best, stating, “2019 was really a quite encouraging year for the sports betting industry.”