FANTINI’S FINANCE: Bang For Your Buck

Sports betting has exploded in the U.S. and one only needs to look to the state that made it legal to see the roadmap to the future: New Jersey. The state has used sports betting to boost casino attendance and increase gross gaming revenues.

FANTINI’S FINANCE: Bang For Your Buck

While traditional casino gaming is a maturing industry, there are young and growing gambling businesses in the U.S.

The biggest buzz for the past year has been sports betting as state after state legalizes it. There are now 19 operating states and nine more pending. That’s up from one just a little over a year ago. The number is expected to exceed 35 in a couple of years.

In addition, online gaming is spreading, which should further the growth of sports betting as in-game wagering takes hold, and online casino games prosper.

New Jersey might offer a glimpse into the future for those looking for industry growth.

Sports betting is adding to New Jersey’s revenues. In May, it provided $15.536 million and in less-lucky-for-the-casinos June, $9.702 million. In all, not a lot of money compared to traditional gaming revenues of $222.23 million in May and $236.05 million in June. That was 6.6 percent of land-based revenues in May and 4.2 percent in June, nice additions but not rocket rides.

Further, factor out the biggest sports betting operations, non-casinos Meadowlands and Monmouth Park, and sports betting contributed 1.8 percent in June and 2.5 percent in May to land-based casino revenues. In other words, sports betting made up about as much casino revenues in the nation’s most mature new sports betting state as has been the historical norm in Nevada.

However, that is not the full story of sport betting’s potential. One part of the story, of course, is the geographic expansion mentioned above. The bigger part will be the spread of in-game betting facilitated by wagering on mobile devices.

Chris Grove of Eilers & Krejcik Gaming says sports betting should grow from $497 million in revenues last year to over $800 million this year to $5.7 billion in 2023. Mobile will be a key part of that. Again, use New Jersey as the example. Retail only sports wagering revenue would be $176 million in 2023 but add mobile betting and revenues more than triple to $555 million, Grove estimates.

The other big growth opportunity is online gaming. Again, New Jersey provides some guidance. Through June, online revenues have risen well over 50 percent to $217.457 million.

In all, sports betting and online betting in New Jersey have added 19 percent to casino gaming revenues, and both have room to grow.

Perhaps New Jersey’s most interesting case is the Golden Nugget. One of Atlantic City’s smallest casinos, the Nugget had just 6.7 percent of market share of traditional land-based revenues in June. However, the property had 35.8 percent of New Jersey’s online revenue. Further, at $13.599 million, online revenues nearly matched the Nugget’s traditional land-based revenues of $15.793 million.

No doubt, the Nugget’s online partners—Flutter, Scientific Games and GAN—will take much of the credit.

But there might be another lesson. Online is a leveler. With its relatively small number of hotel rooms and gaming positions, Golden Nugget doesn’t have the capacity to match Borgata, Tropicana or Harrah’s in generating slot and table game revenues.

But online, their capacity is the same—the more than six million adults in the state of New Jersey.

Of course, the big companies will maintain their advantages of scale and larger player databases, but the ability of small companies and properties to compete on more equal terms is a factor investors should consider.