A new report on the economic impact of a widely publicized gambling boom in New Jersey brings surprising results.
The report, commissioned by the Campaign for Fairer Gambling and shared by Callum Jones of The Guardian, investigates how a surge in online gambling in the state has transformed the economy, and what the real effects of this gambling boom have been.
New Jersey has seen a considerable rise in tax revenue recently, and it’s all down to the introduction of legalized sports betting in the state. By legalizing sports betting, New Jersey was able to start raising money by taxing the sector. And hundreds of millions of dollars were soon raised by doing so.
The problem lies in the effect that this upsurge in sports betting has had overall, however. The report suggests that while the increase in tax revenue has proved positive for the state as a whole, its impact is overshadowed by the associated rise in problem gambling in New Jersey.
Problem gambling has a hefty price tag, and when gambling addiction rises rapidly, so too do the costs associated with it.
Any rise in gambling will contribute to an uptick in problem gambling, and the costs associated with this cannot be overlooked. Problem gambling inevitably increases healthcare and welfare costs, and causes a rise in homelessness and criminal activity.
Cost and effect
While online casinos in New Jersey did contribute $385 million in net taxes in 2022, analysts have calculated that the social costs of the recent rise in problem gambling could reach $350 million.
In addition to the issue of problem gambling, the research focuses on the real economic impact of recent changes. Analysts found that while $2.4 billion was spent on online gambling in 2022, the effect of this spending was actually a reduction in economic activity in New Jersey. The reduction has been estimated at roughly $180 million.
The report goes on to state that online gambling simply “does not yield the types of positive knock-on economic outcomes that other discretionary industries do.” And that’s largely down to the effect of online gambling spending on wages.
Online gambling does pay wages, of course. It’s been calculated that online gambling wages added up to $110 million over the course of 2022. But this figure pales in comparison to the wages that would have been paid out should the money spent on online gambling have been paid for other recreational activities, such as hospitality or leisure. An activity like this would have led to a wage spend of $2.4 billion, and $200 million of new spending in the state’s economy.
Some aren’t so quick to accept the report’s findings, however. Jeff Ifrah, founder and general counsel of iDEA, suggested considering what the social costs of problem gambling might have been had online gambling not been legalized.
“Without legalized iGaming, consumers turn to illegal, offshore sites that offer zero protection to players nor any economic benefits to the state,” said Ifrah.
