Sportsbooks in New Jersey are off their October and November highs. The state’s online sportsbooks posted a decline in revenue to $29.4 million in December. Although revenue has traced an upward momentum, major sportsbooks are in the red.
DraftKings posted a bigger loss over 2018
DraftKings Sportsbook, which operates at the Meadowlands Racetrack, reported that losses from operations for the period ended September 2019 had increased 53% to $115.41 million, from the $75.62 posted in 2018. The first nine months of the year can be slow for sportsbooks as college football starts in late August and NFL action begins in September. DraftKings is second only to FanDuel in the lucrative NJ sports betting market; together, the two sportsbooks account for 83% of the Garden State’s market share and both have expressed interest in an initial public offering sometime in the near future.
A CNBC article, while predicting that sports betting will take off in 2020, notes the underperformance of gaming stock relative to S&P 500. While the S&P 500 has gained 20% since May 2018, when New Jersey began offering legal sports betting, MGM Resorts, whose mobile betting app MGMBets is offered at NJ’s Borgata Casino, grew by only 3%.
NJ’s sportsbooks had a bleak SuperBowl
New Jersey sportsbooks lost $4.28 million on this year’s SuperBowl betting, or a 7.8% negative hold. At last year’s SuperBowl, the state’s sportsbooks had absorbed a loss $4.5 million on SuperBowl betting, paying out nearly $40,000 in winning tickets for the Patriots win against the Rams. While their maiden opportunity at the major game led them to eat humble pie, this year didn’t offer a respite, although they were able to trim losses slightly.
Casinos and racetracks in New Jersey raked in $54.2 million on SuperBowl LIV, up nearly 35% from the previous year. Meanwhile, Nevada also saw enthusiastic betting, with fans wagering $154.7 million, the country’s highest for the year. The amount wagered was higher than last year’s $145.9 million but below the record $158.5 million in handle bet on the 2018 game.
A staggering $4.58bn in sports betting handle for 2019
Although NJ’s betting public won the SuperBowl, sportsbooks have a lot to thank them for. Operators’ total sports betting handle for 2019 raced past $4 billion. The state generated $36.5 million from this amount, around $4 million to $6 million of it attributable to New York residents driving or taking the PATH train to New Jersey. An 8.5% tax on bets at racetracks and casinos added $4.7 million to state coffers, while the 13% tax on mobile betting revenue contributed $31.8 million.
Mobile betting growth expected to maintain momentum
Mobile wagers made up 88% of wagers placed in the state. NJ’s sportsbooks generated $557 million in betting handle, netting a revenue of $29.2 million. FanDuel emerged as the leader, accounting for nearly half of the year’s sports betting revenue through its Meadowlands license. Together, Meadowlands and Resorts Gaming Digital, which has a partnership with DraftKings and other sportsbooks, were responsible for $26 million of the $31.8 million in state taxes.
NJ’s sports betting market likely to continue strong growth
Morgan Stanley pegs New Jersey’s per capita betting revenue at $36 per adult, recognizing it as a positive for future growth, and ‘the best comparable for market potential’ nationally. It bodes well for the state’s retail and online sportsbooks, who have seen revenue and handle grow. Sports wagering is a long-term game for NJ’s sportsbooks, and the future looks bright.