Online gambling has had a net negative impact on New Jersey’s economy, a new study claims.
New Jersey’s gambling industry hit peak 2016 highs in 2022 with the help of the online gambling sector. But a new report suggests this may be a mirage. (Image: NJ.com)
The research, from NERA Economic Consulting, concluded that the state was about $180 million worse off in 2022 than it would have been had online gambling never been legalized. Not everyone’s buying the methodology, however.
The year 2022 was a standout one for the New Jersey gambling industry as its total haul of $5.2 billion matched the state’s all-time high recorded in 2006.
That was just before the explosion of casino gaming in neighboring states, particularly Pennsylvania, disrupted Atlantic City’s East Coast hegemony. The 2008 economic downturn and ensuing recession led to the closure of a quarter of the city’s casinos.
This time around, almost half of the state’s gross gaming revenue — $2.4 billion — was generated by its online gaming sector, which launched just over a decade ago.
‘Success an Illusion’
The new report, commissioned by the Campaign for Fairer Gambling, proposes that this success is illusory. If New Jersey online gamblers had plowed $2.4 billion into other economic activities, such as retail or restaurants, more of that money would have gone back to state residents in the form of wages.
New Jersey online gambling workers were paid $110 million in 2022, which generated an estimated $22 million in new spending across the state’s economy, according to NERA.
But had the $2.4 billion been spent on other economic activities instead of online gambling, this would have generated around $1 billion in extra wages, which would have precipitated $200 million in new spending, according to the report.
Meanwhile, while online gambling in New Jersey contributed $385 million to state coffers in 2022, NERA calculated that the social costs of increased gambling addiction could cost the state $350 million through healthcare, welfare, homelessness, and criminal justice.
Campaign for Fairer Gambling founder Derek Webb told The Guardian the findings suggest that the state-by-state legalization of online gaming in America is “based on false assumptions.”
The NERA report directly contradicted a 2019 study commissioned by iDEA Growth, an iGaming industry advocacy group. That report concluded that online gambling in New Jersey had “directly and indirectly” generated a $2 billion economic impact in its first five years. It achieved this by creating 6,552 jobs, $401 million in wages, and $259.3 million in state and local government taxes, the study said.
Jeff Ifrah, founder and general counsel of iDEA, said the NERA report’s conclusions were “false and inaccurate,” and ignored the exponential growth of jobs in the industry over the past decade.
“The NERA report is misleading for many reasons and betrays a basic misunderstanding of the most fundamental aspects of the legal iGaming industry: without legalized iGaming, consumers turn to illegal, offshore sites that offer zero protection to players nor any economic benefits to the state,” Ifrah said.