May 17, 2023
Five Years After the PASPA Repeal New Jersey Still Leads the Way
Five years after leading the repeal of the Professional and Amateur Sports Protection Act (PASPA), New Jersey continues to dominate the U.S. sports gambling scene with record revenues, despite challenges with problem gambling and regulations, and now accounts for half of all sports bets placed in the state.
- New Jersey Paved the Way for Sports Wagering Nationwide Five Years Ago with the Repeal of PSPA.
- New Jersey Continues to Lead the Country in Gambling Handles as well as Problem Gambling Legislation
- The New Jersey Meadowlands Now Accounts for Half of All Sports Bets Placed in the State
New Jersey led the way to repeal the Professional and Amateur Sports Protection Act (PASPA) and permit states to enact legal sports gambling five years ago this Sunday. Two-thirds of the states now permit sports gambling, with Vermont and possibly Missouri about to join the mix.
Still, New Jersey remains at the forefront of sports gambling in the United States. This past March was the third-best month of revenue ever for New Jersey, with a reported $93 million. New Jersey is also leading the way in other key areas, including combating problem gambling. With this five-year anniversary upon us, now is an opportune time to look back at just how far New Jersey has come.
Post-PASPA Repeal Gains
On May 14, 2018, the Supreme Court decided a long shot of a case that began 10 years earlier in New Jersey: a bid to overturn a federal law, PASPA, that restricted sports betting to just four states that had met a 1991 deadline to legalize it.
Since that fateful day the landscape of sports gambling has been remade. Professional sports leagues, who originally fought New Jersey right up to the United States Supreme Court in an ultimately unsuccessful effort to prevent legal betting, now partner with gambling companies to promote their brand. Ballparks are now covered with sports gaming advertising, and some even have sports betting facilities in their stadiums. Betting odds are an integral part of every sporting event, and daily sports talk shows give regular gaming advice. In other words, in the United States sports gambling has gone mainstream.
Over that same period, sports betting taxes on operators have generated almost $3.6 billion: $3 billion for state and local governments, and $570 million for the federal government. State-level legalization of sports betting created increased tax revenue as well as an additional revenue stream for land-based casinos and horse tracks.
Americans have bet over $220 billion through legal sports gambling outlets in the five years since the U.S. Supreme Court overturned PASPA. That $220 billion figure includes wagers made through the end of March in most states, according to the American Gaming Association, with sportsbooks keeping $17 billion in winnings over that timeframe.
That $220 billion total is up significantly from the $125 billion that had been wagered at the four-year mark. And, according to the New York Post, New Jersey sports gambling was responsible for $31 billion of that number as of last January—the most of any single state.
Post-PASPA Repeal Problems
Of course, introducing gambling nationwide has not proceeded without bumps in the road. Those treating compulsive gambling say calls to their hotlines seeking help have increased significantly in the five years since sports betting was legalized nationwide. Keith Whyte, executive director of the National Council on Problem Gambling, says calls to the 800-GAMBLER help line have increased by 15% over the last five years as “states began the fastest and largest expansion of gambling in our history.”
Multiple NFL players have been suspended for betting on football games. Closer to home, New York Jets coach Miles Austin was suspended for violating a rule forbidding staff from betting on sports other than football.
Colleges in other states that struck partnerships with sports leagues were fined for illegally marketed sports betting to students under the legal age of 21, prompting leagues and gambling companies to revise their policies. Meanwhile, New Jersey regulators shut down Citrus Bowl bets due to honorary Purdue coach Drew Brees’ affiliation with PointsBet just before the game.
The avalanche of advertising for sports betting has also triggered a backlash, including some significant fines for DraftKings and Barstool Sportsbook in Ohio for alleged violations. In response, the gambling industry and most major professional sports leagues adopted stronger standards for their own advertisements. These were widely seen as an attempt not only to do something about the proliferation of gambling advertising – particularly sports betting ads –but also an attempt to head off threatened government regulation of those same ads.
New Jersey’s early experience in sports gambling has allowed it to be at the forefront of consumer gambling protection. Legislators are currently proposing NJ problem gambling bills to limit gambling advertising to college students, educate students about the dangers of gambling, and create specialized gambling diversion courts to address crimes that result from problem gambling. Similarly, the New Jersey Attorney General established the Responsible Gaming Initiative, which helps to identify and assist problem gamblers by using information collected by online gaming operators regarding patrons’ playing habits.
The Current Post-PASPA Landscape
After five years of legalized sports gambling two sportsbook operators — FanDuel and DraftKings — control over 70% of the national sports betting market, according to the gambling analytics firm Eilers & Krejcik.
In the 12-month period ending with Feb. 2023, FanDuel has just under 46% of the market, while DraftKings has over 25%. BetMGM has nearly 12%, and Caesars Entertainment has 6.7%. No other sportsbook operator has more than 2.4%.
Going forward, the trend of gambling operators locating sportsbooks in or next to pro sports stadiums is expected to continue. Sportsbooks may slow down their promotional spending to rein in costs. And sportsbooks will continue to explore prospects for online sports betting in California, and Texas, two huge markets where sports gambling legislation has yet to pass, and in Florida, where gambling legislation tied up in litigation.
New Jersey—the state that paved the way for nationwide sports gambling five years ago – still shows few signs of letting up. New Jersey sports betting had its third-best revenue month ever in March, with operators reporting $93 million in wins. That is up 40% over February and is the state’s third-highest month of recorded revenue since legalized sports betting began nearly five years ago. Only November 2021 ($114 million) and September 2022 ($97.9 million) were higher.
New Jersey sportsbooks held 9.1% in March, and the state collected $11.9 million in sports betting taxes. Online bets accounted for more than 95% of said taxes. March marked the fifth time in six months that the total NJ sports betting handle passed the $1 billion threshold, with $1.026 billion bet in the month.
It should be no surprise that basketball led all categories in terms of completed event handle, according to the release from the New Jersey Division of Gaming Enforcement. Thanks to March Madness the basketball betting handle was $534 million, or more than half of total completed event handle of $1.005 billion.
Parlays were a distant second with $235.9 million bet, followed by the other category with $212.3 million bet. Spring training games helped baseball handle reach $19.7 million.
Sports betting continues to help land-based New Jersey locations as well. “I don’t think the Meadowlands would be open as a racetrack now without sports betting,” said Jeff Gural, who operates the Meadowlands track in East Rutherford, New Jersey. “Sports betting has saved the day.”
The Meadowlands, which includes a FanDuel sportsbook, now takes in nearly 50 cents of every dollar wagered on sports in New Jersey.