Operators, however, are fighting the potential blow and appear to have positive momentum toward a less disruptive resolution.
Multiple sources close to Legal Sports Report indicate the New Jersey Division of Gaming Enforcement (DGE) followed direction to send a cryptic message to sports betting and online casino operators regarding the budget stalemate.
A spokesperson from the DGE did not return phone or email messages seeking comment.
Frozen money and no betting?
LSR reviewed a June 21 email from the DGE, which instructs operators to place this politically charged messaging on their websites by June 24:
Please be advised that beginning 11:59 PM on July 7th your Online Casino and Sports Wagering account could potentially be inaccessible if a State Budget is not passed. All account functions including wagering and fund withdrawals will be unavailable during this time.
That language applies to NJ sports betting providers who operate via a casino license. Those who participate via a racetrack license would need to post the message by June 30.
The shutdown also could force operators such as FanDuel Sportsbook and PointsBet Sportsbook that function through a racetrack license to close a week earlier than casino-based licensees like DraftKings Sportsbook and others.
June 30 is the last day for New Jersey lawmakers and Murphy to agree on a budget for next year. If they do not, Murphy can shut down the state government.
A $3 billion NJ market at risk
Such a move greatly threatens the burgeoning success of the young NJ sports betting market. In roughly a year, New Jersey sports bettors put up nearly $3 billion, leading to more than $194 million in revenue.
Since the start of NJ online casino in 2013, that vertical generated more than $1.2 billion in revenue. Accounts for both legal sports betting and online casino would freeze under Murphy’s move.
A crisis appears shelved, at least for now, as operators pushed back on the DGE and Murphy. Sources indicate DGE backed away from the request after operators expressed concerns.
What NJ sports betting operators said
Operators responded to the DGE directive the following day with a list of serious concerns including:
- Panic and uncertainty for customers if DGE restricted access to their accounts and prevented withdrawals. They wrote that it would be a huge win for illegal black market operators.
- Public backlash against Atlantic City casinos and their online partners. Operators, casinos, and racetracks fear customers might leave the regulated market and never come back if they feel they cannot trust it.
- Tarnish on the gold standard reputation of DGE staff among both consumers and fellow state regulators
Operators suggested allowing bettors to access their accounts for withdrawals during a potential shutdown, even if they could not place any wagers. They also asked for an extension beyond June 30 to post the required messaging, given the uncertainty around the budget situation.
NJ shutdowns are nothing new
Legislators delivered a $38.7 billion spending plan to the governor last week. Murphy continues to play coy about his plans to sign or veto the budget.
The New Jersey state government shut down two years ago, leading to the infamous story of former Governor Chris Christie lounging on a closed beach. Leaders discussed a shutdown last year as well before averting it at the last moment.
The current dispute between Murphy and legislative leaders centers on the governor’s desire for a so-called “millionaires tax.” Murphy wants a tax on earnings above $1 million that the legislature is resisting.