What Can Early New Jersey Numbers Tell Us About US Sports Betting Market Potential?

US sports betting

A phrase cropping up a lot in public discussions and articles about regulated US sports betting and New Jersey in particular it is, we are “just in the first innings.”

That should be borne in mind when reading this article. It looks at just the first two months of sports betting data from the New Jersey Division of Gaming Enforcement.

This is a very partial picture, and extrapolations from the data points are contentious. This is especially so as each interpretation of any month will be overhauled soon enough by the next month’s release.

Yet some early lessons from the data might be useful as we head further into regulated territory, not just in New Jersey but beyond. We can also start speculating about how the US sports betting markets will fit into a global picture.

Let’s go inside the NJ numbers

First, the figures themselves:

US sports betting

Much already has been said about the early market leaders (and the extent to which that might or might not be a false guide) but it is a fair guess that the distribution of the betting by sport in percentage terms gives a good idea of what will be the shape of the market in the years ahead.

US sports are more seasonal than those in Europe and this is reflected in the figures. Of the year-to-date baseball total handle of $119 million, $84 million was bet in August. Meanwhile, as football season got into full swing in September, handle soared from $5.8 million in August to $94.5 million.

Unless some European operators have been living under a rock, none of this will surprise. Said one source who works in the offshore industry, “these numbers are consistent with what I would expect.”

Breaking it down by sport

US sports betting

Source: New Jersey Division of Gaming Enforcement

The same source continued:

“In the offshore industry, football is the lead sport in terms of handle and margin and that includes both the college and pro. Handle for college and pro is relatively equal although there are obviously a lot more games in college with Saturday being the feature day followed by NFL Sunday.”

New Jersey doesn’t provide a breakdown on the college/pro split, but sources within the market suggest this same pattern is repeated. Of course, much of the parlay handle will also be football, although our source suggests there will be some level of cross-sport action. This is particularly the case given right now, in the only month where all four sports leagues season are current.

I can go for that

“The challenge for all operators will be to maintain the interest in each sport season as it progresses,” said Nathan Rothschild, partner and co-founder at consumer-facing sports data platform provider iSport Genius which recently signed a deal with DraftKings.

“Unsurprisingly the US sports wagering market is dominated by the big four pro leagues, with significant backup support from college football and college basketball,” Rothschild adds.

Pointing to the differences between the way sports are consumed in the US compared with soccer in Europe, notably the frequency of scoring and other key statistical metrics, Rothschild predicts that data will be even more central to regulated US sports betting offerings.

“There has been a noticeable societal shift in the US in the way sports fan engage with sport. Sports data has become a central element of this engagement, as evidenced by the use of statistics in broadcast, day-to-day journalism and at venues. Just look at the success of Nate Silver’s FiveThirtyEight.com as an indicator of the way that ‘Moneyball’ thinking is permeating all sports and even politics. I think it is widely acknowledged that data-insights drive betting activity.”

Propping up the US sports betting market

A significant element not broken down by the NJDGE but that might become evident as markets in New Jersey and elsewhere mature will be the success of the props markets. This is already evident offshore, according to our source, and is an area where there has been some influence from Europe.

“That side of the business is growing,” he says. “How many yards will Tom Brady throw for? How many rebounds will LeBron James have? These are encouraging a newer and younger type of customer that can only be good for the industry. These have been evident in Europe for some time but are fairly new to this side of the pond.”

Ripple effect for international markets?

Where we truly enter into the realm of speculation is when we consider what the effect will be on global betting liquidity of sizable regulated US sports betting markets. As it stands, when it comes to soccer the biggest centrifugal influence isn’t Europe but Asia. This is where market prices are ‘stress-tested’ by huge liquidity, producing the lines which the European books follow.

In terms of US sports, until now that role has been filled by Las Vegas, with the offshore entities and particularly Pinnacle playing their own role in defining the lines. It has meant that the Europeans have only had, as our source suggests, “the night shift” working the US sports.

“A regulated US market might also affect the global balance as surely the US sports markets will be available earlier and be more stable,” he says.

“The NFL is Vegas prices and when Vegas moves, the European books move,” says Nick Goff, previously head of football trading at Coral in the UK and now a professional gambler.

Other sports could be a difference

But what about the influence on other sports? One notable factor in the New Jersey data is that nearly a quarter of all handle went on other sports. Our offshore source suggests a large percentage of that will have been soccer and tennis betting — not coincidentally the mainstays of in-play betting in Europe.

How that aspect develops will be of interest to the global betting industry, suggests Goff. “How big will the US online market become for a sport like (soccer)? They will want a slice of that pie. Will America take the UK route, with millions of small-staking customers. Or will it become another Asia with slim margins and big money?”

As they say in the news, developing …

Scott Longley
- Scott Longley has been a journalist since the early noughties covering personal finance, sport and gambling. He has worked for a number of publications including Investor's Week, Bloomberg Money, Football First, eGaming Review and Gambling Compliance. He now runs his own editorial consultancy Clear Concise Media and writes for a number of online and print titles.