Unlike several other US states, New Jersey has had quite a unique approach to the gambling industry. Aside from Vegas, it was the first and only state to turn to gambling tourism for income.
While it certainly had its highs, the quest to turn Atlantic City into the East Coast Vegas didn’t take off as some hoped it would. New Jersey was one of the first states to allow online casino gaming alongside Delaware. This led to the landmark ruling in 2018 which led to other states legalizing casino gambling, and sports betting.
To learn more the experts at askgamblers.com have investigated this matter in detail. Our focus today is on how online casinos have impacted New Jersey’s local economy. Has the tax collected had a positive or a negative impact on local trade, and the social fabric of the Garden State?
The importance of regulated gambling
One of the most notable exports out of New Jersey is the iconic TV show The Sopranos. This series showcased just how dangerous it can be when gambling is driven underground and into the arms of precarious underworld figures.
IGambling is essential to the black economy and was a big part of the show. While legalizing gambling definitely comes with its own issues, that doesn’t mean that ignoring the fact it exists is a good idea, either.
Regulators ensure that online casinos play by the rules. They conduct audits and insist on the use of Random Number Generators (RNG), which ensure that the casino games produce a random outcome.
Obviously, black market casinos or those that have an overseas license have greater issues than simply making withdrawals or deposits.
Casinos based in New Jersey adhere to responsible gambling rules. This means they need to make available responsible gambling tools for anyone who wishes to regulate their own play.
Deconstructing the economic impact
New Jersey has allowed all forms of gambling for longer than other US states. This means there is more information about the impact of online casinos in New Jersey.
Studies by NERA Economic Consulting highlighted some pretty sobering figures about New Jersey’s gambling culture. The study explored the amount of tax it generated, and how that offset against a similar amount being spent in other areas of the local economy.
Having dissected figures from 2022, it found that online casinos contributed just below $400 million in tax that year. While that might sound like an enormous amount, once other areas of the economy were factored in, the number is less impressive.
Despite a net increase in tax of $42 million, it served to highlight the potential social issues that can stem from problem gambling. The NERA study put this in the ballpark of around $350 million, which cancels out much of the profit from the tax base.
In the five years since online casino gaming was first allowed in the Garden State, it has created over 6,550 jobs and paid out $400 million in wages. Again, it’s hard to strike a balance between these two figures.
It’s highly likely these jobs would not have been created without the gambling industry. The possibility also exists that there would be a thriving black market for online casino games if New Jersey had outlawed it. This is exactly the sort of approach we have seen in states such as Utah and Alaska.
Socioeconomic considerations
New Jersey is in a difficult economic position. It sits in the shadow of New York across the river, considered one of the most prosperous regions on the planet. In the last couple of years, New York has also legalized sports betting, with many experts believing that switching to online casino gaming is only a matter of time.
If New Jersey hadn’t moved first, would it be able to encourage industries that weren’t already thriving in New York? Moves by state-wide and national legislators to subsidize electric vehicles have not gone down well in New Jersey.
It’s a balancing act all the time with online gambling, in many ways, you’re damned if you do, and you’re damned if you don’t. California is a state that bats away any suggestion that online gambling should be allowed within state lines. Still, given that half of the world’s biggest tech companies are there, they can afford to pick and choose which industries they allow. Sadly, NJ does not have that luxury.
Final thoughts
The harsh truth is that problem gamblers will gamble, regardless. Unless they get help from problem gambling charities like Gamblers Anonymous, they will seek out black market games instead. Underground betting markets fuel crime, if this money isn’t going into the tax base, it cannot be fed back into services that assist problem gambling.
If the NERA study is right, though, and the net impact continues to be more negative than positive, then New Jersey regulators might have to go back to the drawing board.