Casinos, horse tracks, and sports books, along with their online partners, have generated about $510 million from customers in May. According to official data from the New Jersey Casino Control Commission, the figure is an 8.3% increase from the same period a year earlier.
Chairman of the Commission, James Plousis, ties the increase in gambling activity to rising consumer interest. Plousis said:
“May provided a promising start for the summer season, and positive momentum has been building. Consumer interest has been strong, driven by must-see unique investments recently made in the casino hotels.”
In-Person Gambling Revenue Vs. Online Gambling Figures
Casinos typically prioritize earnings from in-person gamblers because income made online is shared among partners and third parties. Unfortunately, only three casinos had a higher in-person gambling revenue last month than in May 2023. Borgata’s revenue increased 1.5% from a year earlier to $61.4 million, while Hard Rock hit $50 million, rising 28.6%. Ocean also increased, climbing 7.5% to about $32 million. The reduction in online demand may be caused by an increase in alternatives, with players visiting some of the best offshore betting sites for more access to options with gaming, bonuses, and promotions.
Apart from Borgata, Hard Rock, and Ocean, New Jersey casinos saw varying levels of plunges, with Tropicana recording the largest revenue at $20.1 million, but also the highest plunge, at 7%. While Harrah’s fell 4.2% to $18.2 million, Caesars lost 2% to about $18 million, and Bally’s fell 5.8% to $12.4 million.
Adding revenue from internet gambling and sports betting puts Borgata at the number one revenue spot, hitting $111 million, though down 0.3%. Resorts had the lowest revenue in total, falling 0.4% to $13.5 million. Overall, New Jersey casinos and tracks received about $839 million worth of bets and retained $78.7 million after paying winning bets. From January until May, casinos and tracks kept $513 million as revenue after handling more than $6 billion worth of bets.
May was a healthy month for online casinos in New Jersey, which recorded their second-highest figures in a month. Online platforms recorded revenue of $192 million in May, only second to the $197.2 million record set in March. So far, in 2024, online betting platforms have notched a 20.6% increase to $942.8 million. The figures are interesting, considering online casinos have been operating since 2013. In 2023, these service providers hit a yearly record of $1.9 billion. Interestingly, estimates suggest a $2.26 billion revenue for 2024, surpassing 2023’s figure by more than $350 million.
Lower Profits and Other Declines Despite Healthy Revenue Figures
Despite the promising numbers, the Director of the Lloyd Levenson Institute at Stockton University has noted caution. According to Jane Bokunewicz, these high numbers may not directly translate to good profits for the casinos, highlighting rising expenses.
“While revenues increased, so have expenses, and while revenues for the month and year-to-date compare favorably to prior periods, they may not translate into similar increases in gross operating profit down the line,” she noted.
However, she seemed to suggest that users are still gambling despite the biting effects of inflation that affect casino operators and their customers alike. Bokunewicz said:
“Inflation impacts both operators, in the form of costs of goods and wages, and consumers, in the form of prices. So it is especially interesting that, even in times of inflationary pressure, consumers still seem willing to spend their discretionary money with New Jersey’s casino operators.”
Isolating sports betting revenue shows a decline in May compared to figures from the month-earlier and year-earlier periods. The total profit from all operators hit $78.8 million, falling 4% from the $82.2 million recorded in May last year. The decline is larger compared to the $106.2 million from April, a 26% cut.
The state’s total sports betting handle also fell from more than $1 billion in April to $838.9 million in May. Interestingly, this made May the first month in 2024 with a total sports betting handle lower than $1 billion. However, it’s important to note that the handle in May 2023 rose by 8% compared to last year. Nonetheless, these figures are expected to improve from July/August when baseball begins to take center stage.
From January through May, New Jersey has received more than $10 million in sports betting taxes, adding to the state’s $500 million all-time figure. Already, New Jersey’s tax revenue is up $66 million compared to the same period in 2023.
New Jersey Gambling Tax Levy May Increase
Unfortunately, the high figures have spurred some action geared towards increasing taxes. Currently, New Jersey collects 15% of online gambling gross gaming revenue and 13% for sports betting. However, according to a new bill introduced in April, Sen. John McKeon wants New Jersey to collect 30%. Senate Bill 3064 seeks to amend public laws specifying online gambling and sports wagering tax amounts. If successful, the law will take effect on the 1st of January after the enactment date.
Passing this bill into law may squeeze operator profits and spending power, leading to a struggle in overhead costs. While the new tax will make New Jersey’s casino taxation regime one of the highest, it would still be lower than New York’s 51% sports betting figure and Pennsylvania’s 36% GGR levy. However, at 30%, New Jersey’s rate would be higher than those of West Virginia and Michigan, at 15% and 20%, respectively.
A tax increase may benefit offshore betting sites, especially those that support crypto gambling. These platforms allow users to enjoy the same casino games without worrying about restrictions that may stifle regular gambling activity. Furthermore, the new tax levy may force casinos to increase user charges or make general changes to gameplay to favor the operators. Using digital assets to place bets and withdraw earnings solves this problem since the payments are peer-to-peer.
As with several other sectors, casino gambling is also prone to gambling fraud, as highlighted by a recent 57-month sentence handed to a New Jersey tax reporter for perpetrating a $4.49 million gambling fraud scheme. Fairfield’s Omar Khater used stolen identities to declare false casino winnings on tax returns and successfully received nearly $4.5 million in refunds from the Internal Revenue Service (IRS). Along with a relative, Walid Khater, Omar used several people’s information without their consent. Both parties have confessed to counts of conspiracy to defraud the IRS and conspiracy to commit wire fraud.
