All Roads On Gambling Expansion Seem To Stem From New Jersey

The Garden State's critical role in industry growth was underscored at an SBC North America panel
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Prominent gaming industry lobbyist Bill Pascrell III asked Andrew Winchell, director of government affairs for FanDuel Group, to name what he saw as the “three most seminal events that have most impacted online [gambling]” in recent years.

Winchell’s answers for the SBC North America webinar audience during a Wednesday panel were telling.

First, he chose the passage of online casino gaming in New Jersey in 2013.

“New Jersey proved that market could exist, and work well,” said Winchell of an industry that produced $107.7 million in gross revenue for operators in April. “There was a lot of concern about cannibalization of land-based facilities, but in fact it has helped them grow as it drove new customers to those land-based facilities.”

Second, Winchell mentioned the passage of sports wagering in New Jersey — including a bill signed into law in 2012. The former New York legislative aide pointed out that New York’s gambling expansion law a year later adopted similar language to New Jersey, subject to the federal government’s approval.

And third, Winchell referred to the U.S. Supreme Court ruling in May 2018 that struck down a 26-year-old federal law that gave Nevada an effective monopoly on sports betting in the U.S.

Winchell said that ruling not only “released a flood of legislation” in various states for sports betting, but that many states followed New Jersey’s model of offering mobile sports betting as well as retail.

So that’s a clean sweep for New Jersey to a question about key developments in legal, regulated online gambling.

Governor has gambling as priority

Pascrell, the moderator of the panel, said that while watching primary election results on Tuesday night with Gov. Phil Murphy and his family, Murphy offered four key achievements of his first term.

“The first issue he mentioned was what his administration had done for online gaming and sports wagering in New Jersey,” said Pascrell. “Second was wind [energy], No. 3 was cannabis legalization, and fourth was police reform.

“Every state can learn from what New Jersey does and continues to do in the gambling space,” Pascrell added.

sbc north america panel
Andrew Winchell (top center) and Bill Pascrell III (bottom right) were among the panelists Wednesday

Bill Penders, a senior adviser for the New Jersey Economic Development Authority, referred to his agency’s work in helping develop programs for sports wagering at Jersey City State University and for eSports at Stockton University’s Atlantic City campus.

Penders said his agency also works very closely with the regulators at the state Division of Gaming Enforcement — the sort of collaboration that he said some states do not yet have in place.

New approaches as more states come aboard

Winchell said that while many states wisely have adopted a “New Jersey model” when it comes to gambling expansion, later-adapting states are coming up with new wrinkles — such as Arizona allowing tribes and sports arenas and stadiums to be sports betting licensees.

Particularly in the western U.S., Winchell said, lawmakers are more likely to respond “We’re not like New Jersey” when that model is touted to them.

Josh Pearl, director of new market operations at Penn Interactive, said he has been following efforts being made in New Jersey and in Colorado on establishing the same sort of “fixed odds” approach to horse racing betting that is well established in locations such as Australia and the United Kingdom.

Dan Hannigan-Daley, chief executive officer at Sports Info Solutions and a former DraftKings executive, spoke on a panel titled, “Riding the next wave of innovation — Exchange wagering to eSports: Where to place your bets?” Hannigan-Daley echoed Pearl’s comment that New Jersey and Colorado are the two states that have proven to be “a nice landing spot for innovative products.” He said that had been enough in some cases for such products to be launched, and then proven, as a way to get regulators in subsequent states to come aboard.

Hannigan-Daley said that there are a number of “peer-to-peer” gambling concepts that may be launched in New Jersey in the coming months that would be “more about participation in an ecosystem that will be another angle with respect to game theory and tactics that will be at a next level.”

However, Hannigan-Daley did not elaborate on that description, so Garden Staters will have to be patient.

What’s next in the gaming industry?

Both DraftKings executive Kiki Mills Johnson and Benjie Cherniak, a principal at Avenue H Capital, on the same panel agreed that after several years of talk about a “second screen experience,” the industry has begun to pivot.

So instead of finding a way to engage a customer watching a game on TV and simultaneously looking up information on a smartphone, for instance, now the focus is on a “single screen” where a consumer can watch a game and wager on it on the same device.

Cherniak added, “I have said that true innovation in the industry isn’t necessarily going to come from existing European, or even North American entities. I think the next innovation probably comes more from a 17-year-old kid sitting in his basement right now bored with his chemistry stuff and plotting something more interesting.”

The past few years have been an “evolution” for state legislators on gambling issues, Cherniak said, as they are now “trying to find ways to make things happen, as opposed to preventing things from happening.”

Those efforts have also gotten a boost, said Hannigan-Daley, from the rapid about-face by traditional sports leagues who lost their court fight to preserve the Professional and Amateur Sports Protection Act of 1992, which limited sports wagering almost entirely to Nevada.

Cherniak said “what’s surprising to me is not that it is happening, but how quickly [that pivot] is happening.”

Moderator Melissa Blau, CEO of iGaming Capital, confessed of her prediction a few years ago that within a decade, more money would be wagered on eSports in the U.S. than on traditional sports, “I’m probably going to lose that bet.”

Cherniak offered to join in opposing Blau’s informal bet, but both agreed that eSports wagering will grow substantially in the coming years.

Photo by Khairil Azar Junos / Shutterstock

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