Does $184 Million In A Month Actually Qualify As A Success For NJ Sports Betting?

Should the sports betting industry be thrilled or disappointed — or a little of both — over a 92.3% increase in handle in September?
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There’s a reason the trailer for HBO’s Andre the Giant documentary started with a shot of the 7’4” wrestler’s hand pressed against that of the 5’9” “Mean” Gene Okerlund. Context matters. Andre’s hand by itself carries no information. Andre’s hand next to a normal-sized man’s hand says everything.

In a vacuum, without context, Friday’s report from the New Jersey Division of Gaming Enforcement that total sports betting handle in the state for the month of September was $183,948,404 means little.

Add a little context: With just one data point to compare it against — that August sports betting handle in New Jersey was $95.6 million — that number seems monumentally impressive. It’s an increase of 92.3% from one month to the next.

But the whole picture shifts when you sprinkle in additional context. For most of August, there was one mobile sportsbook operating in New Jersey; for most of September, there were seven. In August, the only NFL games you could bet on were preseason games; every weekend in September offered a full NFL regular season slate. College football was similarly dormant in August (there were a handful of games between August 25-31) before the schedule got packed in September.

And shortly before the September revenue numbers were released, NJ DGE Director David Rebuck termed the figures that he’d seen but had to keep under wraps for a couple more days “stunning.”

With all of that context, a tick shy of $184 million really isn’t anything to get all that excited about. You might even be justified in calling the number disappointing. One thing it is not, with apologies to Rebuck, is “stunning.” The only thing stunning is that he felt a 92.3% increase was stunning.

It’s all relative

In Nevada, over the past five years, the average September sports betting handle has been $450 million. From June-August 2018, Nevada’s monthly average has been just under $260 million. September 2018 figures aren’t out yet. But it looks the percentage jump from August to September will be similar to what New Jersey experienced.

It’s not fair to compare total handle in New Jersey, in Year One of legal sports betting, to Nevada, a state with more than 300 casinos.

That said, mobile sports betting in Nevada is constrained by the fact that you have to open each account in person at a corresponding casino. In New Jersey, anyone of legal gambling age can fund a sports betting account from anywhere inside state borders at any time. That ease of access should theoretically offset some of Nevada’s advantages in sheer sportsbook volume and public awareness of sports betting. (The latter is an important battle still being fought in New Jersey, where many residents with a casual interest in gambling remain unaware of their options.)

Regardless of whether we stack it up against Nevada’s $450 million average or not, $184 million just doesn’t feel that huge after a summer spent building to this moment, with everyone saying, “Just wait until football starts.”

From where I sit, there’s a feeling of deflation in the wake of Friday’s numbers, but a good chunk of this particular #DeflateGate can be ascribed to Rebuck’s enthusiasm. Before he made his “stunning” pronouncement, I would have guessed handle would jump from $95.6 million to somewhere in the $200-$250 million range. After Rebuck started gushing, it opened the door for dreams in the neighborhood of $300 million or above.

It’s all about expectations, and Rebuck recalibrated ours.

Still, $184 million comes in a tad under even my initial projections. It’s 92.3% growth, which seems phenomenal to the outside observer, and many mainstream sources presented it as purely positive news. There’s no need for doom and gloom, obviously. This isn’t Al Capone’s vault, as John Brennan joked last week on the Gamble On podcast. It’s more like Daddy hinting that you’re getting a Corvette for your 16th birthday and instead giving you a Camaro.

The mobile monarchy begins

Here’s a number that leaves very little room for argument: 57% of September New Jersey sports handle came from online bets. Yes, online sports betting is already bigger than live sports betting in NJ.

For most of August, the only option was DraftKings Sportsbook, and online handle was $21.7 million. With six more mobile books coming aboard, that number nearly quintupled in September, landing at $104.9 million.

DK remains the leader, combining with fellow Resorts Digital Gaming site BetStars NJ to bank $8.51 million in September revenue. (Our estimate is that at least 95 percent of that win came on DraftKings.)

“DraftKings continues to exceed our internal projections for New Jersey,” said DraftKings Head of Digital Sportsbook Jamie Shea. “While we’re encouraged by our early performance, with more competitors poised to enter the market, we remain focused on ensuring a consumer experience that’s second to none.”

FanDuel finished second among mobile sportsbooks with $2.85 million in revenue, and the daily fantasy sports company that is also entrenched in the live space with FanDuel Sportsbook at the Meadowlands Racetrack was pleased with that.

FanDuel issued a statement, expressing, “We are encouraged to see strong momentum in New Jersey for the newly formed FanDuel Group. In September, we brought in over $175 million in handle and entry fees across all products (Sports Betting, DFS, Horse Racing, and Online Casino).”

It was a strong September all around for the mobile sector, and DK’s dominance suggests that being first to market matters more, as of now, than having favorable lines or attractive betting promotions. Consider also that DraftKings already had major brand recognition and that if you had money in your DFS account, you didn’t need to make a new deposit just for sports betting. It’s really been a perfect storm for capturing the single-app bettors, those who want to play casually and aren’t interested in overloading their phones with options.

Won if by land

The growth for brick-and-mortar casinos from August to September was nothing compared to mobile, but there was still an increase in business coinciding with the start of football season.

Meadowlands remains the land-based leader in New Jersey, though percentage-wise, a bump from $3.06 million in August revenue to $4.37 million in September (up 42.8%) is underwhelming. It’s reasonable to speculate that sportsbook traffic was hurt by NFL Sunday game-day access issues.

Monmouth Park saw revenues more than double, from $898,000 in August to $2.14 million in September. That 135% increase is a little more like what we might have hoped to see overall in state sports betting handle.

But the biggest winner was Borgata, which brought in a perplexingly low $805k in August sports betting revenue despite being easily Atlantic City’s most popular casino. In September, the high-end casino saw a major uptick, up 197% to $2.3 million. The crowds weren’t there over the summer, but September’s numbers suggest that Borgata has its hooks in the market of bettors who want to make a day of it during a college football Saturday or NFL Sunday.

And the September spike is particularly notable given that Borgata is still just operating a temporary sportsbook out of its horse racing betting area. On the Boardwalk, rival Ocean Resort Casino’s stunning permanent 7,500 square foot sportsbook opened on September 6, but came up just shy of $1 million in revenue for September. Once Borgata opens its stand-alone book in the future, that should definitively end the competition for the Atlantic City sports betting destination crown.

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