Sports betting: Lots of questions, not a lot of revenue

By
Rich Pizzutillo
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There is plenty of joy in Mudville these days, with the U.S. Supreme Court clearing the way for sports betting in New Jersey and elsewhere.

Politicians are ecstatic: A new revenue source!

The state’s struggling horseracing tracks are jubilant: A lifeline!

The Atlantic City casino industry, while slightly more restrained, is nonetheless pleased: Hey, we’ll take it! Every little bit helps.

Human nature being what it is, much of the excitement is no doubt due to how long the fight was to bring sports betting to New Jersey (it goes back to the 1993 gubernatorial race between Gov. Jim Florio and Republican challenger Christie Whitman) and the fact that a win was the longest of longshots.

And there’s no doubt that sports betting is a plus in the short term. Monmouth Park said it could have begun taking sports bets on Memorial Day, but will have to wait until the rules are in place. Casinos are already planning their sportsbooks. And, at least initially, New Jersey will have a monopoly.

But, how long until other states catch up? Then what for New Jersey?

For example, why confine sports betting to racetracks, casinos and off-track betting parlors? This restrictive approach to medical marijuana did not work well and is now being revised.

Steven Norton, a gambling consultant and former Atlantic City casino executive, notes that making sports betting more broadly available — say, through the State Lottery — could hurt existing gambling facilities. But, if the ultimate goal is maximizing the tax revenue, why not have more sports-betting outlets?

Will gambling on esports be part of this new industry? That seems both inevitable — and much harder to keep on the up and up. Maintaining the integrity of these contests and the betting on them will be no less important here than it is on the casino floor.

Online sports betting, which apparently will be part of the New Jersey framework (how can it not be?), poses another set of questions. How comfortable will we all be when sports betting evolves (devolves?) into a guy sitting on a couch, with a game on TV and a phone in his hands, betting via an app on whether the next pitch is a ball or strike, or whether the next play is a pass or run? How will that help casinos or racetracks? How will that create significant number of jobs?

Having sports betting, of course, is better than not having sports betting. But the amount that will be bet and the tax revenue it will generate will remain unclear for some time.

Last year, nearly $5 billion was bet in Nevada on sports. Casinos kept approximately $250 million of that, generating approximately $17 million in tax revenue at Nevada’s 6.75 percent tax rate. N.J. state Sen. Paul Sarlo (D-Wood-Ridge) expects $20 million to $30 million in sports-betting tax revenue in the next fiscal year; other estimates are as high as $100 million.

Bottom line: New Jersey — where Casey is always at bat — will have more questions than answers on sports betting for some time.

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