In June, Delaware became the first state (aside from Nevada) to offer a full suite of sports betting options, with New Jersey going live not far behind it.
While Pennsylvania had officially legalized the industry in October 2017, the first sportsbook didn’t debut until last month, prompting sports fans in the state to cross into DE and NJ to make their bets either at brick-and-mortar casinos or via mobile apps.
In November, though, PA finally got its act together, with Hollywood Casino launching its temporary sportsbook first, and SugarHouse and Rivers opening their own earlier this month. At least four more Keystone State casinos are also set to debut sports wagering in the near future, with mobile betting slated to go live before the trees gain their leaves.
While the sports betting economy in New Jersey and Delaware is undoubtedly on an upward trajectory, the launch of sports wagering throughout PA will likely have a negative effect on handle in those states, as players who had originally made the trip to make their bets will now do so at venues closer to home.
It’s all about convenience
NJ and Delaware sports betting handle has been growing by leaps and bounds since the two states went live with the vertical this summer.
Garden State casinos started out with a modest $16.4 million in handle, which skyrocketed to $330 million in November. Delaware, a much smaller state, has also seen big jumps in revenue, especially after the start of NFL season, although the take is relatively low due to the state’s low population.
Those numbers have no doubt been inflated by gamblers in surrounding states, especially those in Philadelphia, which is just a short drive away from online play in New Jersey and casinos in Delaware.
Us Bets managing editor Eric Raskin himself is a PA resident who has been making the trip across state lines into the Garden State in order to legally place wagers on sporting events, while doing a little online gambling as well.
“I live about 15 minutes from the Jersey border, and ever since online sports betting went live there, I’ve been making the drive almost every Friday to the first Starbucks I hit in Jersey to get my weekend bets down,” he told us.
“I have accounts on four different sites, I do a little shopping, usually play a little online poker and online casino too, then head home,” he continued. Once we have online sports betting (and poker and casino) in Pennsylvania, there will be no reason for me to head to NJ. Not only will I be able to place my bets from home, but I’ll be able to jump on daily odds boosts and make in-game bets, the sort of thing I’ve missed out on living in the next state over.”
Crossing the line
When online betting goes live in PA, in the next few months, New Jersey and Delaware will likely be losing many more patrons than Raskin, and seeing reduce handle as a result.
“I have to assume anyone else who lives in PA and has been placing bets in NJ will just switch to PA sites,” he added. “I can’t see any reason to keep making those drives unless the betting lines in NJ are better. So, while I don’t know how many people there are like me who’ve been driving to NJ to place bets for the last few months, I feel comfortable predicting that almost 100% of them will stop betting in NJ once PA mobile betting goes live.”
To his point, fears of unfavorable lines in PA have been a legitimate topic of discussion, due to the oppressive 36% tax rate which the state levies on its sportsbook licensees. To turn a profit, some wondered if casinos would pump up the vig at the expense of patrons.
Those fears, however, seem to be unfounded. We recently did an analysis on the nascent SugarHouse brick-and-mortar sportsbook, and found that its lines are nearly identical to those offered by its sister online offering in New Jersey. With SugarHouse and Rivers being two of the first three casinos to launch sports wagering in the state, they are helping to set the standard for future entrants, which will likely follow their lead and keep lines reasonable.
Raskin isn’t the only area resident making the trip to neighboring states in order to gamble online. Others have voiced their opinion that Atlantic City and Delaware stand to lose customers as a result of PA going live with iGaming and sports betting as well.
“Atlantic City stands to lose their Philadelphia sports betting customers, which will affect sports betting revenues, casino win and other revenues, primarily food and beverage,” casino executive Steve Norton told the Press of Atlantic City. “And Atlantic City could also lose a lot of South Jersey play, as a meaningful percent of South Jersey residents are closer to casinos in Pennsylvania and Delaware.”
Other players have made statements to local media confirming the same. One gambler told Philly.com that he had previously placed bets at Delaware casinos or with an illegal bookie. Now, with sports wagering live in PA, running the risks of betting illegally or going through the hassle of traveling to another state to bet will no longer be necessary.
Rolling with the punches
In all though, New Jersey’s sports betting industry is booming, and while the entrants of PA operators to the game will likely have a negative effect on Garden State gambling revenue, it likely won’t be too visible as NJ handle continues to grow exponentially, with new players discovering legal sports betting every day.
In Delaware, though, any exodus of out-of-state gamblers could be more problematic, as the states sports wagering industry is much smaller than its neighbor to the northeast.
When mobile apps begin to launch in PA, we should have a much better understanding of how big of a dent they will make in the profits of neighboring states. One thing is certain though, the impact will not be a positive one for New Jersey and Delaware.