For the first time ever in May 2019 New Jersey took in more money on sports betting than Nevada (Las Vegas has had sports betting since 1949). In May, New Jersey surpassed Nevada $318.9 million to $318.3 million. By July 2019, the disparity had grown with New Jersey taking in $251 million and Nevada $235 million.

This performance was not unexpected because sports betting became very popular in New Jersey soon after the state legalized it in June 2018 following an enabling U. S. Supreme Court decision. For the first year in operation, New Jersey had $3.2 billion bet legally on sports with 75 percent of the total coming via bets made online.

Eighty-three percent of New Jersey sports bets in June 2019 were online and 17 percent were made at a physical facility, which reflects the fact that more online betting sites are being added in New Jersey. For instance, customers at Buffalo Wild Wings will soon be able to place bets on BetMGM through the restaurant’s app in New Jersey and other states where sports betting is legal.

At this writing in early September 2019, twelve states have up-and-running sports betting operations, and five of these have mobile betting—Iowa, Nevada, New Jersey, Pennsylvania, and West Virginia. Mobile betting is legal in three additional states but it is not yet operational. Four states confine sports betting to a physical location. 

Interestingly, Tennessee permits sports betting but has no casinos; thus sports betting in the “Volunteer state” will be entirely online.

At least six states are considering legislation to legalize sports betting. Sports betting is already legal in states with significant horse-racing enterprises—New York, Pennsylvania, Delaware, New Jersey, Arkansas, Indiana, New Mexico, and Iowa, with California considering legalization. Kentucky is unlikely to be included.

Geographical expansion of legal sports betting is both an opportunity and a threat to horse racing. It is an opportunity to the extent that sports bettors crossover to bet on races, similar to how table-game players and sports bettors crossover. Sports betting is a threat to horse racing if people who support the pari-mutuel product divert cash away from racing and racing does not receive compensatory crossover betting in return.

While sports betting is a low-margin business (about 5% before expenses), it attracts customers to casinos and racinos. Whether horse racing will benefit is a question that will be answered soon.

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