Study shows online gambling is bad for New Jersey's economy
Online gambling has an overall negative impact on New Jersey's economy, according to a new study.
The study by NERA Economic Consulting concluded that the state's economic losses would be reduced by about $180 million by 2022 if online gambling had never been legalized. However, not everyone accepts this methodology.
2022 was a banner year for New Jersey’s gaming industry, with total revenue reaching $5.2 billion, matching the state’s all-time high set in 2006.
That was before casino gambling exploded in neighboring states, especially Pennsylvania, destroying Atlantic City's East Coast supremacy. The 2008 recession and subsequent recession caused a quarter of the city's casinos to close.
This time, nearly half of the state’s total gaming revenue ($2.4 billion) was generated by the online gambling industry, which was founded more than a decade ago.
"Success is just an illusion"
A new report commissioned by the Fair Gambling Campaign believes this success is illusory. If New Jersey's online gamblers plowed the $2.4 billion into other economic activities like retail or restaurants, even more money would flow back into the hands of state residents in the form of wages.
Online gambling workers in New Jersey will earn $110 million in wages in 2022 and generate an estimated $22 million in new spending for the state’s economy, according to NERA.
But according to the report, if that $2.4 billion were spent on other economic activities rather than online gambling, it would result in about $1 billion in additional wages, resulting in $200 million in new spending — and the dollar would come out ahead.
While online gambling in New Jersey brought $385 million to state coffers in 2022, NERA calculates that the increased social costs of gambling addiction could cost the state $350 million in health care, welfare, homelessness and criminal justice losses.
Derek Webb, founder of the Campaign for Fair Gambling, told the Guardian the findings suggested the US federal legalization of online gambling was "based on faulty assumptions".
"Fundamental misunderstanding"
NERA’s report directly contradicts a 2019 study commissioned by iGaming industry advocacy group iDEA Growth. The report concluded that online gambling in New Jersey had a "direct and indirect" economic impact of $2 billion in the first five years. This was accomplished 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 “wrong and inaccurate” and ignored the exponential growth of jobs in the industry over the past decade.
“NERA’s report is misleading for a number of reasons and exposes a fundamental misunderstanding of the most fundamental aspects of the legal iGaming industry: If iGaming is illegal, consumers will turn to illegal offshore sites that offer no protection to players, It also cannot bring economic benefits to the country,” Ifhra said.
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Source: www.casino.org
