Sports betting in New Jersey, which was legalized in June 2018, faces its first real crisis with the coronavirus pandemic canceling March Madness and forcing the cancellation or postponement of a variety of other sporting events, including NBA and NHL games.
In March 2019, the NCAA men’s basketball tournament helped the state’s online and retail sports books rack up more than $372 million in bets and $31.7 million in revenue. All of that is in jeopardy now, according to Dustin Gouker, lead sports betting analyst for PlayNJ.com.
He talked about what the unprecedented changes mean for the state’s sportsbooks and more:
ROI-NJ: How big of a financial impact would you say the canceling of March Madness will have on New Jersey’s sportsbooks? What about nationally?
Dustin Gouker: We’re obviously now at just about all sports being canceled, so we’re talking tens of millions of dollars in revenue overall that will not be flowing through sportsbooks. It’s difficult to forecast the exact amount that would be won or lost on the tournament in New Jersey, but it’s certainly in the millions and possibly greater than $10 million. The handle for the tournament would probably be somewhere between $100 million and $200 million in New Jersey alone. …
This is just an educated guess, but with 17 states now having some form of legal sports betting, I would guess we’re talking between $500 million and $1 billion on March Madness wagers (nationwide).
ROI: Where does March Madness rank in terms of betting in the grand scheme of things?
DG: As an event nationwide, all 67 games included, the NCAA Tournament attracts more bets than the Super Bowl. This is the first year in a lot of states that it will be legal to bet, so it would have been pretty huge.
ROI: What about other leagues, like the NBA and NHL, and possibly Major League Baseball, canceling games?
DG: Obviously, we’re in a world where there’s almost nothing to bet on other than some of the overseas sports that are still going on. The only thing helping operators in some states, such as New Jersey and Pennsylvania, is the fact that online casino revenue shouldn’t be negatively impacted, and could even increase. But, this is obviously a pretty dire situation for U.S.-facing sportsbooks, which have ramped up staff and now have nothing to offer bettors.
ROI: What if the cancellations linger into the NBA and NHL playoffs?
DG: There is more betting on playoff games, but there is a higher volume of regular season games that can be bet on. So, none of it’s great. There’s certainly a chance pent-up demand will be unleashed once sporting events resume. But, right now, that’s impossible to know.
ROI: What about global sports, such as European soccer, which is still being played in some places?
DG: Global sports are a relatively small part of the U.S. betting handle. But, if they go on, gamblers might migrate to wagering on these sports.
ROI: Can you estimate how the sportsbooks will fare this March, financially, now that sports have ground to a halt?
DG: We’re going to approach zero for the rest of the month. I assume, for the rest of the month, sportsbooks will be at 5% to 10% of planned (action). March was a pretty normal month until recent days, so it’s probably about a third of what you’d expect to see.
ROI: Will New Jersey’s sportsbooks be able to recover?
DG: Absolutely. The New Jersey and U.S. sportsbook industry is a long-term play. After March Madness, April, May and especially the summer increasingly have less and less money wagered. If the crisis were to creep into football season, then we’re obviously going to see problems. But, if we get to that point, just about every industry would be dramatically impacted, not just sports betting.
Of course, individual companies will have differing impacts. DraftKings, for instance, is a mostly U.S.-facing company. Its revenue comes almost entirely from DFS and sportsbook operations, though it also has casino gambling in New Jersey. So, it’s facing a stark reality. FanDuel is part of a larger European company and is probably better equipped to weather the storm.
ROI: Finally, does the relative novelty of sports betting in New Jersey help or hinder a recovery?
DG: Tough one to answer. I think bettors will come back pretty quickly when sports will return. The bettors the sportsbooks have acquired are really engaged and, again, there might be pent-up demand. … The biggest issue is that you ramped up sports betting operations and now have staff with nothing to do. And each company will handle that differently.