The Supreme Court has created some angst among all the key stakeholders in New Jersey’s quest to legalize sports betting, as it has yet to issue its opinion in Murphy v. National Collegiate Athletic Association. What’s known is that a decision will come by the end of June, which is when the Court goes into recess. The element of the unknown hasn’t stopped New Jersey lawmakers from putting pen to paper on a new sports-betting bill, a draft of which was published by Legal Sports Report.
The new bill clarifies some important details that had long been speculated, including the establishment of a layered integrity fee (Editor’s Note: the integrity fee was waved in the final version of the bill), specific licensing fees and taxes that sportsbook operators will be required to pay the state, and a regulatory framework that will be implemented and overseen by the New Jersey Division of Gaming Enforcement (NJDGE).
For prospective sportsbook operators, however, the biggest takeaway from the bill pertains to online sports betting, which has represented a longstanding gray area because the genesis of New Jersey’s original sports-betting bill predated online gambling in the state.
Online sports betting will be permitted, but only narrowly
It’s clear that New Jersey lawmakers are prioritizing the interests of the state’s established gaming operators, as the bill states that “a sports pool may not be operated at any location other than a sports wagering lounge located at a casino or racetrack.” In other words, online-only operators — and specifically daily fantasy companies like DraftKings and FanDuel — will be prohibited from adding a sportsbook component for their New Jersey users.
The bill does nonetheless pave the way for online sports betting so long as it is presented as an extension of a brick-and-mortar casino or racetrack: “A casino which holds a sports wagering permit may conduct an online sports pool or may authorize an Internet gaming operator or other entity licensed as a casino service industry enterprise … to operate an online sports pool on its behalf provided the terms of the agreement are approved by the [NJDGE].”
The bolded part (my emphasis) is key, as it opens the door for an Internet company like DraftKings to partner with a licensed gaming operator and offer an online sportsbook in tandem with that operator. Indeed, the daily fantasy giant has been rumored to be pursuing precisely that avenue. That also means that the strategic partnership reached in January by a pair of online leaders in the gambling space, SBTech (a sports betting solutions provider) and GAN (a software provider that powers New Jersey’s existing online gambling platforms) will likely prove fruitful.
Will online-only sports betting ever come to New Jersey?
For now, the short answer is no. The first iteration of sports betting in New Jersey — whether in a regulated form as outlined in this latest bill, or an unregulated version that could be activated in the event of a narrow ruling by the Supreme Court — will be rooted in brick-and-mortar sportsbooks housed in existing casinos and racetracks.
That is a sensible and strategic move on the part of lawmakers; they naturally want the biggest piece of the revenue pie flowing through their own established gaming operators. If those operators choose to join forces with an online company, that’s their prerogative, and they would hold the leverage in any partnership negotiation due to the way this law is written.
Projecting a few years down the line, though, it’s plausible that an online partner could decide its resources would be better served lobbying Trenton for the adoption of an online-only model. Or alternatively, it’s conceivable that one of the major offshore players (like Pinnacle or BetCRIS) determines that entering the New Jersey market could represent a significant growth opportunity, and opts to pursue its own lobbying campaign.
Either way, it appears that lawmakers will need to be incentivized to consider legislation allowing for online-only sports betting, as such a wrinkle would give way to an influx of competition for the very casinos and racetracks that the state is attempting to return to prominence via the adoption of sports betting.