Fans of the New York Giants and Jets watch a football game after placing bets in the sports betting… [+] lounge at the Ocean Resort Casino in Atlantic City, NJ, where an hour-long line of gamblers waiting to place bets stretched onto the casino floor as kickoff approached on Sunday, Sept. 9, 2018, the first full day of NFL football since New Jersey began offering sports betting in June. (AP Photo/Wayne Parry)
In international sports betting, online is king, accounting for two-thirds or more of total activity in most regulated markets.
The August revenue numbers for New Jersey’s recently-regulated sports betting market suggest that online betting will play a similarly dominant role in the U.S. market.
Online sports bets accounted for just over a third of New Jersey’s total sports betting revenue in August. That’s with only three brands (DraftKings, playMGM, and SugarHouse) in the market for only part of the month with limited products and deposit options.
“Online sports betting appears to be as substantial an opportunity as forecasts suggested,” said Dermot Smurfit, CEO of GAN plc, a gambling technology provider that, alongside SG Digital, powers FanDuel’s online sportsbook in New Jersey.
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“Unlike internet gaming forecasts back in 2013, this time the forecasters look to have got things right. Online sports betting revenue will likely equal or eclipse retail sports betting revenue in September.”
DraftKings strong in the early days. DraftKings led all New Jersey online sportsbooks in August with $2.9 million in total revenue. The company was the first online sportsbook in the New Jersey market following a soft launch on Aug. 1 and full launch on Aug. 6.
DraftKings had the New Jersey market to itself for about three weeks before being joined by playMGM and SugarHouse in the last week of August.
The fantasy sports giant will see a material boost in September thanks to the start of the NFL season and a variety of improvements including the addition of PayPal to its sportsbook wallet.
The customer acquisition edge that DraftKings accumulated in August will probably allow it to hold on to the online sportsbook lead in New Jersey through at least September.
September will bring the first real test. Legal sports betting officially came to New Jersey on June 14, but the ad hoc nature of the initial betting options and a light sports calendar meant that the first few months of operation were more of a dry run than a true litmus test.
With the NFL and college football both in full swing, online sportsbooks from seven brands and counting and retail sportsbooks finding their footing across the state, September will provide the most germane look to date at the actual potential of regulated sports betting in New Jersey.
Nevada provides a sense of where New Jersey might land. Historically, sports betting activity in Nevada jumps about 150% from August to September, suggesting that New Jersey should approach $250 million in wagers during September after totaling just under $100 million in August.
The road to 42 online sportsbooks. New Jersey’s sports betting market is structured in a fashion that allows a significant number of brands to compete in the Garden State. Key licenses to operate online sports betting are restricted to the state’s land-based casinos and racetracks. Each key license holder is allowed to run up to three unique sports betting brands online and may partner with external brands.
That’s how a brand like DraftKings – which doesn’t operate a casino or racetrack in New Jersey – can offer online sports betting in the state. The company is partnered with land-based casino Resorts Atlantic City.
With nine casino slots and four racetrack slots (including one for a now-defunct track), New Jersey has an effective ceiling of 42 online sportsbook brands.
The market may never see all 42 spots claimed, but it may get close. Based on reported partnerships and launch timelines, we will likely have close to 18 online sportsbooks live in New Jersey before this NFL season ends, and it’s feasible that another 10 or so will find their way online before the start of next year’s season.
If the New Jersey market meets expectations and other states continue to open at a rapid clip, 30 will be in the rearview mirror before 2019 draws to a close.
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