[Editor’s Note: Captain Jack is a long-time professional sports bettor and observer of the sports betting scene. He’s headquartered in New Jersey, so he’s witnessed the implementation of post-SCOTUS-decision sports wagering there and in Delaware, and is closely following developments across the country. This blog will concentrate on the growth of sports betting throughout the U.S. and the world, as well as some of the opportunities it brings for players.]
New Jersey released the revenue numbers for the first two weeks of legalized sports betting in the state and the numbers are going to be getting a lot of media attention. Both the William Hill Sports Book at Monmouth Park and the sports book at Borgata opened for business on June 14. For two weeks, until The Ocean Resort in Atlantic City opened its doors on June 28, these were the only two places to place legal sports wagers in the state. New Jersey has a long history of being the bellwethers of casino regulation and reporting. While Nevada has long had murky reports that only give a general picture of casino performance in regions of the state, New Jersey will be reporting their numbers per casino or racetrack. For people, like myself, who avidly track this emerging industry it’s a big step into the light.
The Numbers
Here are the revenue numbers as reported by the NJ Division of Gaming Enforcement (NJDGE):
Borgata * $986,831
Monmouth Park* $2,279,166
Ocean Resort** $192,671
Total $3,458,668
– 16 days of legal wagering.
**- 3 days of legal wagering.
At first glance, the media will probably latch onto that $3.46 million revenue number and attempt to extrapolate it out. After all, the 191 sports books in Nevada won $20.5 million in May and May was a far busier sports month. The final two weeks of June were reliant on MLB and World Cup Soccer. The numbers show that two physical sports books took in roughly 16% of what 191 sports books (and mobile apps) made in the entire month of May 2018. Does that mean that a mature New Jersey sports betting market with 10-20 sports books and mobile apps and website betting could top $100 million in revenue? Well, possibly, but first let’s look deeper at that eye-popping $3.46 million.
The Devil is in the Details
If you dig further into the NJ DGE report, you’ll find there are some details here that make this initial two-week introduction to legalized betting less rosy as it seems. First, New Jersey calculates the monthly revenue numbers the same way Nevada does:
Revenue = (Tickets Sold) – (Tickets Cashed)
In Nevada, this doesn’t present too many issues because the effect of cashed winning tickets on past events is mitigated by the creation of new tickets to be resolved at later dates. However, in New Jersey, no futures events (like the Super Bowl or World Series or even World Cup) were resolved in June. Tickets were only sold in June. This means just about every wager placed in those two weeks on a futures event is currently being reported as revenue. This inflates the revenue number greatly for June, and outside of some World Cup futures, probably for every month for the rest of the summer.
Fortunately, the NJDGE notes this in an addendum to its report and then adds some numbers to provide a bit more clarity. First, the total handle in the state for those two weeks was $16,409,619. Of that, $1,045,772 was wagered on futures events that haven’t resolved. Next they provided a detailed breakdown of how the win for the casinos breaks down:
Completed Events $1,203,700
Future Events $1,045,772
Uncashed Winning Tickets $1,209,196
Total $3,458,668
We’ve gone from an eye-popping $3.46 million to a less impressive $1.2 million. It’s tough to estimate the effect of those futures tickets, but generally the hold % on futures is between 20-25%. So a better estimate of the net win for New Jersey sports betting is actually $1,203,700 + $250,000 or so on total handle of $16,409,619. That’s an 8.86% estimated hold for the sports books. That’s a relatively strong number compared to what Nevada normally holds (4-6%).
What Have We Learned?
Don’t believe the hype that you’ll read about a $3.46 million profit in the first two weeks. The true number is about 40% of that. New Jersey’s numbers are impressive when you consider the entire $16 million was placed at about 16 total betting windows in two locations in the state. We’ll see the same discrepancy in July as well. Additionally, FanDuel Sports Book opens at Meadowlands Racetrack just outside of New York City on July 14. Their numbers should be equally as eye-popping given that over 11 million people live within a 25-mile radius. Then in August, the mobile apps and web-based wagering will start to show up in New Jersey. Unlike Nevada, registration and deposits/withdrawals will not need to be done in-person at the casino. By the time the NFL kicks off their season on September 6, the New Jersey market will be flush with betting opportunity and healthy competition.
In the meantime, I’ll continue to update this space with new developments regarding the expansion of sports wagering in the United States. Next up, Mississippi! They plan to go live with legalized wagering on July 21. I’ll talk about what that market looks like in my next post.
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What is the reason for the much larger profit in terms of percentage? Do the sportsbooks there deal worse lines than those in Vegas (like a 25- or 30-cent MLB line)? The bettors may be dumber, but that wouldn’t matter if the NJ houses know how to balance the books and lay off action. Short-term results where dogs won or covered (which usually kills the ploppies), perhaps?
Good question, Kevin. It’ll be interesting to see if the profit percentages remain higher than Nevada numbers in months to come or if this was just an anomaly. In order to compare apples to apples we’ll need a full month of data that corresponds to the same month in Nevada. We’ll get that for July, but it’ll be early September before we see the Nevada numbers for July.
My theory is that bettors were anxious to make any wager after their long wait for legalization. There was probably a bit more dead money in the pool in the form of donation bets. For the most part so far, the two operating sports book companies in NJ have not used any regional bias to shade the lines against local teams. We’ll see if that changes in the future though, especially when we get to college football betting in Mississippi in a few weeks.
What is the Vig in the different NJ sports books?
How do they compare to the normal 10% in Vegas?
10%? The “normal” bet is to bet $11 to win $10, that’s a $0.50/$11 = 4.55% vig. It’s a dollar tax on an $11 ticket, but you only pay the tax half the time, assuming you win half the time. Presumably the point spread is the fair line, but in reality books shade their line to balance their books, so if you know what you’re doing you can get an edge over the average better who is just betting their favorite team. But then you would be paying a bit more vig to the book. It’s a tax on winners. And eventually the book won’t take your action and you have to use runners to place your bets.