New Jersey in Focus: Call for federal review of iGaming’s economic impact

Lea Hogg January 8, 2024

SiGMA news

New Jersey in Focus: Call for federal review of iGaming’s economic impact

The allure of economic prosperity in the gaming sector often accompanies the legalization of gambling. This has prompted US states to liberalise their gaming laws.

In New Jersey, the iDEA industry body, boasting members like FanDuel and DraftKings, previously touted the sector’s positive economic contributions, reporting around US$ 2 billion in sales, 6,552 new jobs, US$ 401 million in wages, and US$ 259 million in taxes between 2013 and 2018.

Campaign for fairer gambling

However, a recent study commissioned by the Campaign for Fairer Gambling (CFG) challenges this narrative. The National Economic Research Associates (NERA), tasked by CFG, conducted an extensive examination of the impact of iGaming in New Jersey, aiming to unveil the hidden facets of its economic repercussions.

According to the NERA report, the “fundamental flaw” in iDEA’s Meister Report lies in considering money spent on iGaming as an economic benefit. NERA contends that funds allocated to online gaming are essentially diverted from other sectors of the productive economy, resulting in a net negative impact.

The report estimates that the US$ 2.4 billion spent on iGaming by New Jersey consumers caused a substantial US$ 180 million loss in economic output.

Call for federal review

Derby-born Derek Webb (in photo above), amassed his wealth through gambling, yet he presently advocates against bookmakers’ utilization of fixed-odds betting terminals.

Webb, who initially launched CFG in 2012 focusing on the UK gambling industry, has expanded the organization’s scope to address concerns related to US iGaming expansion. Webb’s advocacy for responsible gambling practices echoes his prior involvement in imposing restrictions on Fixed-Odds Betting Terminals (FOBT), resulting in a reduction of the maximum stake from £100 to £2.

NERA underscores the economic superiority of alternative forms of recreation, arguing that iGaming’s high-margin, low-labour nature diminishes its economic value. The study also points out that a significant portion of gambling expenditures is channelled into advertising for customer acquisition, with comparatively lower economic impact.

Despite iGaming operators paying higher taxes than some recreational counterparts, the study argues that these taxes are offset by the fiscal and social costs associated with problem gambling. CFG, therefore, calls for a federal examination of the broader consequences of iGaming expansion, urging a cautious and balanced approach across all state jurisdictions.

CFG founder Derek Webb emphasizes the need for a federal review, citing the absence of a comprehensive study on the national annual cost of problem gambling since 1999. He warns against being swayed by misleading projections and asserts that iGaming, in the larger picture, imposes significant costs on the entire US economy.

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