A study by NERA Economic Consulting, commissioned by the Campaign for Fairer Gambling, indicated although New Jersey has profited from mobile sports betting tax revenue, an increase in problem gambling could cancel the financial benefits.
The Guardian reports the study said the growth of online gambling in the state has negatively affected the state’s economy, employment and wages, refuting the gambling industry’s claims about online wagering.
According to the report, online gaming “does not yield the types of positive knock-on economic outcomes that other discretionary industries do.” The study said bettors wagered $2.4 billion on online gambling in New Jersey in 2022, which reduced the state’s economic activity by $180 million.
NERA said the online gambling sector contributed about $110 million in wages in New Jersey in 2022, generating $22 million in new spending. However, spending that $2.4 billion on other recreational activities could have resulted in about $1 billion in wages and $200 million in new spending.
In 2022, according to state data, online casinos in New Jersey generated $385 million in net tax revenue, up from $42 million in 2017. But the NERA report said the state could pay $350 million in social costs, including healthcare, social services, homelessness and criminal justice due to online gambling addiction; those numbers were based on a study from the U.K.’s National Institute for Economic and Social Research adapted for New Jersey.
The Campaign for Fairer Gambling commissioned the NERA review in response to a 2019 report from iDEA Growth, a gaming industry advocacy group that includes DraftKings and FanDuel. That report focused on the economic benefits of legalized online gambling, such as job creation and increased tax revenue. iDEA Growth said online gambling in New Jersey generated $2 billion in economic output, created 6,552 jobs with $401 million in wages and $259.3 million in tax revenue between 2013 and 2018.
NERA, however, rejected iDEA Growth’s claims, stating online gambling has negatively impacted New Jersey’s economy and that iDEA Growth’s report did not reflect what other sectors could deliver at the same level of spending.
Derek Webb, founder of Campaign for Fairer Gambling, said, “America’s iGambling gold rush got out of hand quickly because the debate has been dominated by advocates for unfettered proliferation.” Webb added some states legalized online betting based on falsely optimistic forecasts. In response, iDEA claimed the NERA report left out important aspects of the legal online gaming sector, thereby presenting an inaccurate assessment and false conclusions.
