West Virginia was the first state to pass a sports betting law in 2018, and lawmakers and regulators in other states took notice when it did.
But now we have a second state to enact a sports betting law in 2018, as New Jersey joined WV with its new law this week. And that means will be more fodder for other states looking at legalizing sports betting and possible new precedent.
There is a lot to unpack from the law, but here’s a look at three key provisions that other states may choose to follow or discard when working on their own sports betting laws.
The NJ sports betting tax rate
New Jersey set the tax rate at:
- 8.5 percent for land-based sports betting revenue
- 13 percent for online wagering run by casinos
- 14.25 percent for online wagering run by racetracks.
These are reasonable rates that should allow both the state to make money and operators to run sports betting at a profit. It falls in line with the 10 percent rate in WV sports betting and well short of the 34 percent effective tax rate that Pennsylvania enacted (along with a $10 million licensing fee.)
States have been all over the map on the tax rates, some considering rates as high as the one for PA sports betting. Few (or none) have considered going as low as the 6.75 percent rate in Nevada.
But with another well-known gaming state setting a reasonable rate in the mid-range, will other states follow suit?
No betting on certain types of games
The NJ sports betting law puts in place a lot of limits on what types of wagers can be booked in the state. It limits or bans wagering on:
- High school games
- Collegiate games involving New Jersey-based teams or college games played at venues in the state.
- Esports
The first point is going to be repeated everywhere, but the others may not be.
West Virginia, for instance, did not limit wagering on colleges (and neither does Nevada). If one of the goals of regulating sports betting is to compete with the existing black market, limiting wagers on NJ colleges or games played in NJ is a bit self-defeating.
The offshore sportsbooks and local bookies will still happily take action on those games if NJ does not. And the games that could have some of the highest amounts wagered on them in NJ are left to the black market.
Esports is also another strange one. People are still a bit afraid of esports as an emerging vertical, and seeking to limit wagering on esports seems premature. It would certainly be wise to handle esports carefully, but just banning it because it’s different isn’t a great idea. But still, esports found its way into a sports betting law, and other states might see something they want to copy.
There’s also the provision that limits casinos that own stakes in sports teams or leagues. Golden Nugget Atlantic City owner Tilman Fertitta also owns the NBA’s Houston Rockets. Under the new law, Golden Nugget can have a sportsbook, but it can’t offer NBA betting.
No integrity fees (or anything else leagues want)
New Jersey, not shockingly, gave the professional sports leagues none of what they wanted from its sports betting law. Leagues didn’t get integrity fees (or a cut of all wagers), control of data, or control of which bets were taken. That’s not shocking, as those same leagues stopped New Jersey from legalizing wagering via the federal courts for years. The leagues are not winning any popularity contests in NJ.
The NBA and Major League Baseball are barnstorming around the country asking for certain provisions from lawmakers. So far, they are batting/shooting at a zero percent clip. The states that have legalized wagering to date (including states mentioned above as well as Delaware, Mississippi and Nevada) have not given the leagues one red cent or any. If you’re counting, that’s six states with legal sports betting, and none giving anything to the leagues.
That’s a bad precedent that New Jersey just added to. NBA/MLB hope they can turn that around with a law in the waning days of the New York legislature, as they have two bills in play with a lot of things they like, including a royalty/integrity fee.
If the leagues don’t get what they want out of NY sports betting, the leagues may have no laws on the positive side of the ledger that they can point to.
