New Jersey's Already Saturated Sports Betting Market Just Got More Saturated
At one point - and this is likely still the case - DraftKings and FanDuel cornered around 70% of the New Jersey sports betting market despite there being around a dozen websites and a population of just under 9 million.
Keep in mind that a portion of that 9 million is ineligible to gamble due to being under the age of 21. Likewise, only a portion of the adult population is inclined to gamble.
Early launch in the Garden State included bettors from New York City crossing the border. That's no longer necessarily the case as New York has now legalized sports betting.
That brings us to this new football season and the entry of three additional sportsbook operators.
The NJ Division of Gaming Enforcement recently approved three applications.
Prophet Sports Betting Exchange and Sporttrade will introduce the Garden State to the “betting exchange” or peer-to-peer betting models. Bettors can gamble against one another at much lower fees compared to legacy sportsbooks.
The third new operator is Fubo Sportsbook, which is owned by TV streaming company Fubo TV.
Prophet Sports Betting Exchange and Fubo are partnering with Harrah’s, Sporttrade acquired access to New Jersey via Bally’s.
Prophet Exchange's entry into the NJ market didn't just happen. They were hoping to be live prior to the last Super Bowl.
“What we really hang our hats on is that we are sports bettors,” COO Jake Benzaquen told Gaming Today last January. “(Prophet Exchange) is a complete sports betting environment. We do not come from a financial trading background or anything stock-related. We are laser-focused on the sports betting community here.”
Gaming Today explained the Prophet Exchange model:
Prophet Exchange’s revenue will come from money taken from a net percentage of winnings. Long-term winners in the top .1% of certain stakes and Return on Investment thresholds will pay some net profit to fees. However, these are just drops in a bucket when compared to the vig top performers will save by using on the platform.
Prophet CEO Dean Sisun told Legal Sports Report last month that “Prophet is going to be the sports betting exchange of choice because of its simplicity and focus on sports betting principles.”
Sisun claims that the odds offered a Prophet Exchange will be better than those at the typical sportsbook.
Prophet was founded in 2018 and initially licensed in the UK.
Sporttrade and Prophet Exchange expect to offer reduced vig for customers but liquidity will likely be an issue, especially in such a saturated marketplace like New Jersey. The Wire Act requires that said liquidity come from within that state's borders.
Legal Sports Report observes:
That could get more challenging with more exchanges as liquidity and customers get fragmented between them.
Complexity is an issue as well. From Legal Sports Report:
Exchanges can also damage the wider sports betting ecosystem. For example, they allow people a simple way to lock in profits from matched betting or bonus abuse.
As a result, sportsbooks have responded by reducing their bonuses in other markets.
The Fubo sportsbook may have a tough time cracking the market as well. FuboTV had 547,880 paid subscribers at the end of 2020, but this is nationwide. That's around the population of New Jersey's two largest cities combined: Newark and Jersey City.
CORRECTION:
Gambling911.com had incorrectly reported that Fubo was reconsidering entering the NJ sports betting market. Fubo has since reached out to Gambling911.com and would like to correct the record. They are fully committed to entering the New Jersey sports betting market and such reports were false. A prior quote attributed to Fubo was misinterpreted.
- Aaron Goldstein, Gambling911.com
