New Jersey Beats Nevada for the Sports Betting Crown in May

It was slow out of the gate, but New Jersey has quickly become the sports betting king. Less than a year after legalizing wagers on sporting events, New Jersey surpassed Nevada as the biggest state for placing bets in the month of May.

Bettors wagered $318.9 million in New Jersey in May, the latest data shows, just edging past the $317.4 million they bet in Nevada. Although it's a major accomplishment, it wasn't unexpected. In fact, the entire Northeast is expected to become a massive sports betting mecca once neighboring states legalize it as well.

Image source: Getty Images.

A confluence of two mighty streams

There are reasons New Jersey is doing so well. Benjamin Franklin once described the state as a keg tapped at two ends. Talking about why it would not become a financial powerhouse, Franklin said New York City to the north and Philadelphia to the south siphoned away its resources. 

Yet when it comes to gambling, that makes New Jersey uniquely positioned to capitalize on the sports franchises that dominate those cities. It's also the reason Atlantic City still survives today even as casino gambling has spread to surrounding states.

The New York metropolitan area hosts the Mets and Yankees in baseball; the Knicks and Nets in basketball; the Giants and Jets in football; and the Islanders, Devils, and Rangers in hockey. Philadelphia has the Phillies, 76ers, Eagles, and Flyers, respectively. 

Each of those franchises has millions of loyal fans, and at various times many have stood atop their respective leagues, sometimes even dominating their sport for years. That's why they're some of the most valuable franchises in pro sports.

While other cities have their own die-hards, the population density of New York and Philadelphia, plus their relative proximity to each other, make New Jersey the perfect nexus for sports bettors.

Not all bets are equal

There is one caveat to New Jersey's May beat: It includes wagers made on future events in its handle, which Nevada excludes (the handle is how much bettors wager; revenue is how much casinos keep). A future event would be a bet on the outcome of the 2019 World Series, for example, so the total will be different from the completed events' handle.

Nevada sportsbooks had a win percentage of just 3.55% compared with the 5.9% New Jersey's sportsbooks recorded. Year to date, basketball has taken in the biggest handle in New Jersey, with over $632 million, followed by baseball at $213 million, and football with $115 million.

However, the big winner in New Jersey sports betting isn't one of its Atlantic City casinos, but rather the Meadowlands Racetrack in East Rutherford, which accounts for 53% of the entire state's year-to-date revenue.

Data: New Jersey Division of Gaming Enforcement. YTD = year to date.

Resorts Casino is second best, with 27% of the total, followed distantly by Monmouth Park Racetrack (9%), Ocean Casino Resort (5%), and Bally's (2%), which has its sportsbook through Caesars Entertainment (CZR), as does Harrah's. The biggest casino in the state, MGM Resorts' (MGM 0.90%) Borgata, is barely registering, with less than $1 million in year-to-date revenue.

More growth to come

The success of the Meadowlands and Resorts can likely be traced to their partnership with FanDuel and DraftKings, respectively. Those daily fantasy sports sites are driving about 90% of the sports wagering in the state. It's why over 80% of all wagers are placed over the internet and not at one of the physical casinos or tracks.

We've now lapped the one-year anniversary of the U.S. Supreme Court decision to strike down as unconstitutional the Professional and Amateur Sports Protection Act of 1992, which cleared the way for the current sports betting boom. And though Nevada will undoubtedly rebound from time to time to reclaim the top spot, the state now has a permanent new rival in sports betting. If New Jersey's casinos can start luring more gamblers to their own sportsbooks, they may hit a home run in revenue generation that will allow them to thrive once more, instead of just survive.