How Profitable Is Online Gambling In New Jersey?
How Profitable Is Online Gambling In New Jersey?
The online gambling industry in New Jersey has flourished in the last six years.
This is largely due to improved legislation that has made it easier for land-based casinos to operate their services online and pair with bigger software providers.
Support from the community has also helped this change, with many recognizing the benefits online gambling provides the local economy.
With increased tax expectations helping to improve measures throughout the state, it’s clear that the industry is making a good impression.
Some are curious about just how profitable is the online gambling industry in New Jersey.
With so many restrictions and rules, is it really still possible to make money as a casino operator in this state?
In this article, we’ll answer just that, taking you through exactly how online gambling works in New Jersey giving you a comprehensive picture of the industry.
The Legal Status Of Online Gambling In New Jersey
Like many other states in the United States, online gambling remained illegal in New Jersey for some long years.
In January 2011, the New Jersey Legislature made their first move towards legalization by allowing New Jersey residents to engage in online gambling if they were over the age of 21.
Later in the same year, however, State Senator Jennifer Beck pointed out that legalizing online gambling would need more than the approval of New Jersey voters.
To address these concerns, a revised bill, A257B, was signed into law in 2013, legalizing casino and poker games in Atlantic City.
The final version of the above bill was overwhelmingly supported in the Assembly by a margin of 68-5 and in the Senate by a vote of 35-1.
There were conditions, however, the main one being that this law legalizes online casino gambling for a 10-year trial period.
The casinos in Atlantic City, the only place within New Jersey where in-person gambling is allowed, became subject to a 15% tax on online gambling revenue.
This was a sharp increase from the 8% previously imposed on casinos—and it wasn’t the only expense that came with this legislation.
In order for legal casinos to fund the application process, they must pay a non-refundable deposit of $100,000.
If approved, this money is put towards the $400,000 fee need to acquire the gaming license.
In addition, approved casinos must pay $250,000 in renewal fees, along with an additional $250,000 annual fee that supports the state’s compulsive gambling treatment programs.
Despite the difficulties with this legislation and the enormous costs to the casinos, it has provided New Jersey casinos with the opportunity to partner with an iGaming software provider such as Betfair or 888.
In June 2018, A4111 was signed into law, allowing sports betting throughout New Jersey.
This came as a result of several legal battles spanning several years. It allows casinos and racetracks to boost their long-term financial prospects.
Although this bill is primarily focused on in-person wagers, it allowed sports betting services to seek approval for online and mobile sports betting one month later.
It is important to state that A4111 only applies to professional sports and collegiate games.
This means that betting on high school and Esports games is still illegal in New Jersey.
Casinos pay 13 percent of their total revenue from electronic sports wagers. Tracks must pay 1.25 percent more than this, or 14.25 percent.
In addition, casinos handling sports bets are also subjected to a 0.25 percent handling tax at the federal level.
Legal Casinos In New Jersey
Although the A257B bill has been welcomed throughout the state of New Jersey, it’s led to online casinos spending significant amounts of money to stay open.
There are five brick-and-mortar casinos in New Jersey that hold licenses allowing them to offer online gambling.
Through partnerships with outside software companies, these casinos are able to launch multiple “skins” to their online gambling repertoire.
This brings the total of online gambling casino websites, or skins, up to 21.
How To Tell The Difference Between Legal & Illegal Online Casinos
Even in New Jersey where the situation is highly regulated, there are a number of illegal online casinos operating from offshore locations.
Engaging in these is dangerous, not least because you don’t know if you’re getting a fair game, and there is nothing you can do to recoup your money if you are cheated.
If a gambling website is legal and regulated, it will have a Division of Gaming Enforcement licensed and regulated insignia on the homepage. The insignia links to the gaming enforcement division’s website.
These websites are also listed on the NJ Division of Gaming Enforcement Website. If you cannot find the site you are planning to use on that list, chances are it is not legal.
The Regulator Of Online Gambling In New Jersey
Online gambling in New Jersey is regulated by the Division of Gaming Enforcement (DGE).
This division was established in 1977 when legal control of casinos was first introduced. Their responsibility automatically shifted to include online gambling when the bill was passed.
Their mission includes protecting those who engage in gambling by maintaining an industry that is free from organized crime influences and ensures the integrity of casino owners and operators.
In addition to this, their regulatory role makes them the responsible body for vetting license applicants and monitoring exclusion list violations.
If you have a problem with a gambling game and feel you have been treated unfairly, you should report this to the Division of Gaming Enforcement so it can be investigated.
Legally Allowed Games
When the A2578 bill was first released, casino owners and operators were legally allowed to offer the following games in New Jersey:
The bill further mentions that variations and composites of the above games may also be allowed as long as the DGE finds them suitable for use after an appropriate testing period.
Online gambling websites can also apply to have other casino games accepted under this bill, provided they are in line with the public interest.
Eligibility To Gamble
New Jersey regulators are extremely strict in upholding the tightly restricted rules regarding those who can gamble at online casinos in the state.
They go to great lengths to verify the age of the individual playing online gambling. To participate in this activity in New Jersey for real money, you must be 21-years-old or above.
Although players don’t have to be residents of New Jersey, they must be physically located inside the state to gamble on New Jersey gambling websites.
To monitor and enforce this, geolocation software that can pinpoint the exact location of an individual will be used.
It’s worth noting that although you cannot play an from account registered in New Jersey while outside of the state, you can create and deposit funds into an account from anywhere in the world.
Devices That Can Be Used To Gamble
New Jersey has no restrictions on the devices you can use to access online gambling.
In some states, access by mobile devices is limited due to a delay in keeping up with the latest technology, but this is hardly felt in New Jersey.
All legal casinos within the state have a mobile app for their online gambling games; most other establishments have them, too.
If they don’t, you can almost always use a mobile responsive website in place of an app if necessary.
How To Deposit Money On Legal Online Casino Websites
With stringent rules and regulations, it’s normal to assume that the process of depositing and withdrawing money from online casino websites in New Jersey would be a difficult process.
In reality, it’s just as easy as paying for any other service online.
Most online casino websites will allow you to make deposits in several ways, including:
- Major credit cards (Visa/Mastercard/Discover)
- Online bank transfer
- Instant eChecks
Some casino operators with land-based casinos in Atlantic City will also allow you to deposit and withdraw cash in-person on their premises.
New Jersey Online Gambling Profits
The legalization of online gambling in New Jersey was always seen as something that would bring significant financial benefit to individual casino operators and to the state.
Despite these predictions, however, nobody could be sure just how much financial benefit this new avenue of tax would bring until these websites went live.
The first website went live late in November 2013, indicating that no one had any significant financial expectations.
In truth, many assumed that any beneficial data would come the following month when there was enough data to see if their predictions were right.
To everyone’s surprise, November alone saw casinos bringing in profits of $833,142 after taxes.
When a whole month of data became available at the end of December 2013 it revealed a profit of $6,279,972. With those figures, people started to believe that online casinos could be successful in New Jersey.
Poker & Casino Games
When considering the profits of online gambling, it’s important to look at the difference between poker games and general online casino games.
In the beginning, casino operators paid almost equal attention to both online poker and casino games; this did initially look promising.
Although casino games offered a clear winner, December 2013 showed that poker could bring in over half of the same revenue.
This might sound good to most of us when looking at the profits, but to maximize income, many services started paying more attention to online casino games.
As a result, casino games rose in popularity, bringing in over $5,000,000 more than poker by March 2014.
Unfortunately, the market for online poker games has since only become more niche. Four casino operators have stopped offering online poker altogether.
In total, poker revenue has amounted to just $140,976,990 throughout New Jersey since the launch date in 2013.
Although this might initially look impressive, it’s a very small contribution when you consider that casino revenue has bought in a significant $1,136,940,037.
Taxes Paid By The Gambling Industry
Of course, online casino operators aren’t the only ones to have benefitted from the relaxation of gambling laws.
With a rise in the amount of taxes and other miscellaneous costs casinos would have to pay to get their services online, New Jersey has also seen an injection of cash into their tax system in recent years.
In just six years, the online gambling industry has paid $223,898,068 total in taxes, significantly affecting the overall New Jersey economy.
The Frontrunner Operator
Seven casino operators own the nearly two dozen legal online casino websites in New Jersey.
Of these operators, each has managed to recoup a significant profit from their investments since the launch date.
The frontrunner in the New Jersey casino world, however, is Golden Nugget, who teamed up with iGaming company Betfair.
Since its launch, this casino operator has managed to gain a total gaming revenue of $353,265,746.
This puts them nearly $73,000,000 ahead of the second most profitable operator Borgata / Party NJ.
How To Keep Up To Date On Future Online Gambling Profits
If you want to stay up-to-date with the latest developments on the financial side of the gambling industry, head over to the Division of Gaming Enforcement website.
As the official regulators of online gambling in New Jersey, they provide all the information about the previous month’s legal online gambling revenue.
From there, you will be able to understand future trends as they occur and continue to see the growing potential for profits within the industry.
It’s clear to see that, despite raising taxes and other associated costs casinos must pay to operate successfully and legally online in New Jersey, profits are booming.
With seven online casino operators controlling nearly two dozen websites and earning enough profit to survive for six years, there is no doubt that this industry will continue to grow.
Although not all experimental ventures have been a success, such as the lack of interest in online poker, these services have been diverse enough to adapt.
As a result, we are going to see the financial rewards recouped by these operators continue to rise as we go into the next decade, and perhaps even beyond that.
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