A new report claims that the success of online gambling in New Jersey has been largely negated by the resulting social costs. [Image: Shutterstock.com]
Make some big claims
A new report claims that the benefits of New Jersey’s online gambling sector could be “almost equal” to the resulting social costs. The industry analysis is carried out by NERA Economic Consulting, commissioned by the Fairer Gambling Campaign.
Generating hundreds of millions of dollars in tax revenue
New Jersey was the first major state to adopt online sports betting when the federal ban ended in May 2018. It also welcomed online casinos and poker sites, which now generate hundreds of millions of dollars in tax revenue annually.
NERA used a British study to calculate that the industry’s social costs add up to $350 million each year, compared to $385 million in net tax revenue contributed by the electronic gaming sector in 2022. It took into account money allocated to health care, criminal justice and homelessness. And luxury.
number crunching
The new report indicates that New Jersey’s online gambling sector is hurting overall economic output, wages and jobs. It claims that $2.4 billion in spending by people in the state on online platforms in 2022 led to a decline in economic activity of about $180 million. NERA believes that spending the same money on other things like eating out or shopping would have directed more money toward wages, which could then go back into the local economy.
Online gambling workers in New Jersey received about $110 million in wages in 2022, resulting in $22 million in new expenses. This compares to the $200 million in new spending the group believes could have been achieved if the $2.4 billion had gone elsewhere and generated $1 billion in wages.
He questioned whether lawmakers were properly weighing the costs and benefits
Fairer Gambling Campaign founder Derek Webb questioned whether lawmakers were properly weighing the costs and benefits of digital expansion, saying: “America’s iGambling gold rush quickly spiraled out of control because the debate was dominated by advocates of unfettered proliferation.” He believes some states have pushed legislation “based on faulty assumptions” only to later realize that benefit estimates were “overly optimistic.”
Not everyone agrees
The Fairer Gambling Campaign also commissioned NERA to evaluate a similar report published by industry advocacy group iDEA. It concluded that the iDEA study did not accurately take into account the opportunity cost of gambling expenditures.
Online sports betting is currently available in 28 states, and online casinos operate in six states.
IDEA founder and general counsel Jeff Ifrah responded and claimed as much Nira report Inaccurately assesses the situation and makes wrong conclusions. He stressed that people simply resort to illegal offshore sites when there is no legal alternative. These platforms provide no economic benefits to New Jersey or any protections for players.
