New Jersey’s retail and online sportsbooks used $1.24 billion in stakes from mid-June, when the first book launched in 2018, to the end of the year.
After taking a closer look at the numbers, we can draw some conclusions and lessons to see how things play out in 2019 and beyond. The bottom line is not only for our enlightenment, but it may also be beneficial for operators, legislators in states currently considering legalization, and sports bettors.
Here we look at who was the market leader, how things evolved over the course of a year, how different properties compare, and how partnerships worked. None more.
action moves online
There is no doubt that mobile and web-based sportsbooks are the present and future of sports betting. Since his early August, when DraftKings Sportsbook became his first online sportsbook in NJ, there has been an unbroken straight upward line showing the change in the overall percentage of bet processing from direct sportsbooks to the Internet. I have. From 23% in August to a whopping 76% in December, yes, it’s cold in New Jersey.
Does this mean no in-person sportsbook experience, no camaraderie, no big-screen TVs, no desire to actually hold a ticket and hand over cash? Of course not. Bettors have wagered over $73 million each month since August. Also consider the possibility or likelihood that people are sitting in sportsbooks and using their mobile phones to place bets online. Same game.
What caused the online boom?
Accessibility, convenience, and ease of funding via PayPal, ACH, and other forms of electronic payments are the rules of the day. All online sportsbooks offer at least some great options for funding and withdrawing accounts. This is certainly a change for many bettors who have migrated from offshore sportsbooks, where funding and withdrawals often require circuitous and risky routes.
Also, kudos to New Jersey legislators and regulators for setting the right tax rate and creating a good atmosphere for both operators and bettors. There is a tax of 8% on face-to-face bets and 13% on online bets.
With a few exceptions, licensed sportsbook prices offered online match those available overseas. Licensees are profitable and unregulated in New Jersey It shows that it can comfortably compete with the patron market.
It remains to be seen how the 36% tax rate Pennsylvania imposes on operators’ gross income will affect sportsbooks there. So far, prices at home for Ruffed grouse are about in line with what we’ve seen in New Jersey. But the sportsbook there just launched in mid-November, so data is limitedThe weight of taxes could ultimately mean that businesses there would be less profitable. The result could be less work associated with sports betting, less marketing spend spent to generate new customers, and ultimately lower prices. It looks like you’ve found the sweet spot.
An added benefit is that each licensee can contribute up to three “skins” online. It’s hard to draw any conclusions there unless the earnings report analyzes the earnings generated by individual sportsbooks online, but more competition will ultimately benefit consumers, as well. Licensees should also benefit from knowing which sportsbook partners are performing best for them.
Additionally, unlike Nevada, New Jersey allows you to register accounts remotely. This is another convenience that allows bettors to download and register with multiple sportsbooks without having to drive across the state. They can find the one or several they enjoy the most and likely remain regular customers longer.
Daily Fantasy Sports (DFS) Operator Turns Sportsbook
FanDuel and DraftKings are moving fast and aggressive in New Jersey to get results. His FanDuel sportsbook at the Meadowlands racetrack in densely populated New Jersey, just eight miles from New York City, has nearly doubled the revenue of its closest competitor in brick-and-mortar sportsbooks. That place was his MGM-owned Borgata in third place, generating $5.94 million against his $8.97 million at Monmouth Park. How much credit does the operation itself, the quality of the in-person experience (nice lounge with lots of TVs), or the proximity to New York? Hard to say, but overall the formula works .
We’ve heard rumors that FanDuel paid in the low eight figures for the privilege of running America’s first sportsbook in the Meadowlands. Not only the revenue generated so far (unclear what percentage FanDuel itself maintains), but also in the future, demonstrating that FanDuel is a desirable partner to prospective licensees in other states for.
DFS competitors DraftKings are doing very well as well, and as you can see from the chart, mostly online, FanDuel ranks second in terms of revenue.
We estimate that about 95% of Resorts Digital’s revenue came from DraftKings Sportsbook, and the other Resorts skin, BetStars NJ, had a much smaller user base and came online more than two months after DraftKings. Together, DK and FD account for approximately $42 million, or approximately 80%, of the $53 million generated through online sportsbooks.
Speaking of 80 percent, According to John Brennan, DraftKings CEO Jason Robins revealed at a conference in New York City in November: and in new jersey sports betting It accounts for 80% of the total business. ”
With the upgraded MGM sportsbook, the addition of PointsBet and the expected introduction of Hard Rock’s Bet365, we would expect that percentage to drop slightly, but probably not by much. It’s pretty incredible that both sportsbooks have become juggernauts almost overnight, just 18 months after the Federal Trade Commission rejected a merger attempt on the grounds of DFS’ monopoly.
To match the dominance of DraftKings and FanDuel, let’s compare the poor performance of the Las Vegas-based entity. Caesars properties, MGM and Golden Nugget each have less than $1 million in online revenue. Simply put, their product is inferior. They didn’t advertise much and didn’t seem ready.
The playMGM sportsbook was initially only available to Android users for about two months before being able to support the iOS system, but there is no web-based platform yet. The price is good, the platform itself feels like Windows 98, but the DFS player is Windows 7 (still a long way to go to get a Windows 10 comparison).
Sports betting revenues represent a very small percentage of overall casino operations, which may be due to the slow debut of established companies. MGM has made it a priority to establish goodwill with professional sports leagues because of its prestige and access to its user base. We’ll see if it pays dividends in the future.
keep the percentage
In completed events, New Jersey sportsbooks maintained 5.8%. This is roughly in line with Nevada’s mature market (5.52% from 1992 to present). Futures bets will be valued and adjusted (causing a total difference of about $22 million) to probably be in the 6.5% range.
Professional sports leagues try to get as much percentage as possible in the form of “integrity fees,” “loyalties,” “small fees,” or rewards, but you have to be careful. In newer markets, sportsbooks claim it could be generated on the order of 10% or more, trying to influence legislators to kick a certain percentage. There are some costs to other businesses and possibly consumers.
The nearly decade-long battle against the 1992 federal ban on serious sports betting outside of Nevada has been worth it. He has already collected $10.3 million in state tax revenues without imposing new taxes on citizens.
Outlook for 2019
Some observers predict that New Jersey will overtake Nevada’s overall betting handle (about $550 million per month) in the next year or three. Stay seen. There are a lot of professional bettors and aspirants based in Nevada who are throwing big bucks. Nevada will continue to be an international tourist attraction with extensive convention spaces, restaurants, shows, scenes, strips and more.
Atlantic City is in the midst of a small-scale renaissance that it can’t keep up with, so expectations may need to be tempered. New Jersey’s population has tripled, making him triple the distance to New Yorkers who may be waiting until 2021 to access a mobile/online sportsbook.
At current pace, total betting handles could reach about $4 billion in 2019, with New Jersey coffers at about $33 million and combined book revenue likely at about $240 million. I guess. not bad.