At long last, the final hurdle to bringing sports betting to the Garden State has been cleared. Yesterday, Gov. Phil Murphy signed a bill legalizing a full range of sports betting options inside New Jersey at both physical sports books and through online portals.
The bill (A 4111), passed by a unanimous vote last Thursday in both the Assembly and the Senate, explicitly legalizes sports wagering in the state while providing the legal framework and regulatory structure necessary for the smooth operation of the industry.
But not everyone was happy with the final language of the legislation (i.e. the leagues), and the precedent it might set.
Fears of a delay unfounded
The overwhelming passage of A 4111 was certainly cause for celebration for the state, which had spent $9 million arguing its case to overturn the Professional and Amateur Sports Protection Act (PASPA) over several years. Monmouth Park, for its part, was raring to get started immediately, hoping to capitalize on the running of the Belmont Stakes last weekend, but was forced to pump the brakes.
No one was quite sure just how quickly the governor would actually sign the bill. Some thought that he would drag his feet and use the delay as a bargaining chip in a budget impasse currently paralyzing the legislature. That standoff might not be resolved until June 30, and could have potentially delayed NJ sports betting for an additional three weeks.
Murphy didn’t exactly allay those fears after the bill passed, putting out a statement that his office would need to study the bill carefully before he put pen to paper. Others surmised that the signing would take place during the East Coast Gaming Congress, which kicks off Wednesday and which will have a heavy focus on sports betting. The governor is scheduled to give the keynote address on the final day of the event.
Fortunately, he acted quicker than expected, signing the bill Monday and declaring that he would make the first legal NJ sports bet personally at Monmouth Park’s sports book, scheduled to open for business at 10:30 AM on Thursday.
What’s legal and what’s not
The bill authorizes Atlantic City casinos and horseracing tracks to offer physical sports books, along with betting through Internet-connected devices and mobile apps. Wagers can also be placed through automated kiosks located inside licensed venues. The industry will fall under the purview of the Division of Gaming Enforcement (DGE), the same agency which oversees the state’s casinos.
To get things moving as fast as possible, the DGE has issued emergency regulations for a period of 270 days, which will allow qualified operators to begin taking sports bets immediately. Also baked into the law is a clause which allows for the operation of a temporary sportsbook facility for use during the construction of a permanent lounge. Internet betting will take a little bit longer to arrive, starting no earlier than 30 days after the effective date of the bill.
Gamblers 21 years and older will have the option of placing a full range of bets on a wide array of sporting events, something previously only legal in Nevada. Single-game wagers, teasers, parlays, over-unders, moneyline, prop bets and more are all fair game.
Off-limits are high school sporting events, as are collegiate events which take place in the state of New Jersey and collegiate events which involve a New Jersey team.
- eSports betting is not allowed
- Casino sportsbook gross gaming revenue will be taxed at 8.5%, with online revenue taxed at 13%. An additional 1.25% tax will be levied on revenue at horse racing tracks.
- Golden Nugget, whose owner also owns the Houston Rockets, will be able to participate in sports betting, but can’t take bets on NBA games.
- Operators may use their licenses to partner with other brands, and launch a total of three independent skins
- Venues must obtain personally identifiable information from anyone who places a single wager above $10,000
Setting the standard
New Jersey, which put in the brunt of the work in overturning PASPA, will be looked to by other states pondering how to set up and regulate their own industry.
This will worry execs from several major sports leagues, who failed in their efforts to include an integrity fee into the final language of the legislation. League lobbyists have been busy as of late, traversing the country trying to convince state governments to include such a fee into their sports betting bills. While the amounts sound deceptively small, they add up to a huge chunk of operator revenue due to the way they are calculated.
NJ officials pushed back hard on the idea, with one even suggesting that the leagues instead cut the Garden State a check for the millions it spent on fighting its Supreme Court case. In the end, lawmakers left it out, something which other states may now feel emboldened to do as well.
The NJ model may not be perfect, but sets a good example for the industry. After all, things could have been much worse. We simply need to look at the system taking shape in neighboring PA to understand that.
The Keystone State excels at squeezing every last bit of juice out of its gaming facilities, levying sky high tax rates and charging eye-watering licensing fees.
In New Jersey, sports books will pay a relatively sane 8.5 – 13% of gross gaming revenue, as compared with the 6.75% rate charged in Nevada. In PA, on the other hand, operators will be slapped with an outrageous $10 million licensing fee and be forced to hand over effectively 41% of their profits in taxes. If the leagues have their way and convince lawmakers to include in integrity fee, the industry may become completely unviable altogether.
New Jersey’s rational tax rate and regulations will ensure the industry grows to its full potential – and other states will take note.
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