Today’s Sports Betting Hearing in Atlantic City
Joe Brennan, Jr., Chairperson of iMEGA.org (The Interactive Media Entertainment & Gaming Association, issued a statement at a public hearing on sports betting in Atlantic City on Monday April 5, 2010. New Jersey, as many Gambling911.com readers are aware, is attempting to legalize sports wagering on the Internet in an effort to boost the state ecomony.
iMEGA - Interactive Media Entertainment & Gaming Association
Joe Brennan Jr. - Chairman
Statement - Public Hearing on Sports Wagering, Atlantic City NJ (4/5/2010)
Last week in Pennsylvania, Montgomery county officials sent a workcrew to a nice, well-manicured home in the Philadelphia suburb of Abington, and had the lawn dug up and the shrubbery and gardening torn out. Why? Because the homeowner is an alleged sports bookmaker, and law enforcement believed he had stashed millions of dollars in profits from the enterprise by burying it on his property. And they were apparently correct, as nearly $1 million was found on the property and seized. That money was in addition to close to $2.7 million county officials seized from the homeowner four years prior, proceeds from what was alleged to be a sports betting operation handling $50 million dollars per year.
The remarkable thing about this story is that you don't have to go on a treasure hunt in someone's back yard in order to find substantial money from sports betting - it is everywhere, in full view, for all to see.
Just open to the sports section in today's paper or turn on ESPN or Comcast SportsNet. You'll get the betting lines, totals, even adjustments based on injury reports and changes to futures (I believe the futures on the Washington Redskins just improved over night by adding Donovan McNabb to their roster). Sports betting information in the media is as common as information for the stock market - and probably more widely read, even on Wall Street.
The state of New Jersey, and in particular Atlantic City, would do very well by reaping substantial tax dollars, creating jobs and, most importantly, helping drive visitors and revenue at the local casinos, if it were to regulate sports betting.
It is an interesting coincidence that today's meeting is scheduled on the same day as the championship game of the NCAA men's basketball tournament in Indianapolis. While hosting the Final Four has no doubt been a short-term financial boon to that city, the NCAA tournament has been an even greater economic stimulus to another town more than 1,800 miles away: Las Vegas.
Since the tourney began three weeks ago, room occupancy rates at Vegas casinos have skyrocketed and business is up substantially. You would be hard-pressed to get a room on the Strip, since the town has swelled with visitors looking to place legal wagers on the NCAA tournament.
And that's not all. Once players have placed their sports bets, they also move on to other gaming activities - table games, slots, horse racing. They eat and drink in the resorts' restaurants, shop in the resorts' retail locations, utilize the hotels' spa and relaxation services.
Direct revenue from the wagers is magnified 10x by the economic halo effect of drawing hundreds of thousands of visitors - many from the tri-state area of New York, New Jersey and Pennsylvania - out to the middle of the desert to place legal, regulated wagers on the games.
And here, in Atlantic City? Unfortunately, there will not be that same influx of visitors and revenue, because regulated sports wagering is not permitted in New Jersey.
Now obviously, money is being bet on sports here in New Jersey. The final report of the National Gambling Impact Study Commission, back in 1999, estimated that sports wagering in the US represented an underground economy approaching $380 billion - BILLION - marketplace, largely provided by organized crime, local street-level entrepreneurs (like the accused in Abington, PA) and peer-to-peer, between friends.
Since that report, all the way back during the Clinton administration, we have seen the explosion of the Internet, the boom of fantasy sports, and an ever expanding universe of televised sports. Given that, it's hard not to imagine that sports wagering - as an underground economy - is approaching a Half-Trillion dollar market. And, Atlantic City and New Jersey is getting nothing out of it.
It could, though. Estimates peg a state-regulated sports betting marketplace in the state to be in excess of $10 Billion. A sizable chunk - more than $3.5 Billion - could be realized by Atlantic City's casinos. Given the population density of the state, its position in the Northeast Corridor and less-expensive transportation options when compared to Las Vegas, Atlantic City could see a significant stimulus to its resort casino economy if state-regulated sports wagering were permitted. Instead of low occupancy levels during Super Bowl weekend or the NCAA tournament, Atlantic City would become the place to be on the East Coast during those periods.
Now, state regulated sports wagering is not a single, silver bullet remedy to all of the challenges facing this city's resort casino industry. But it can be part of the solutions needed to reverse the town's fortunes by providing a stimulative effect. More traffic means more dollars means more jobs. Atlantic City's casinos would be able to renovate their properties, and new properties being constructed would have an additional pillar on which to base job creation and ongoing success.
Our association comes at this issue from the vantage point of the Internet. Online operators would like to find a home in the US, as it represents the world's largest market for them. Enthusiasm for New Jersey as the world hub for Internet gambling is high, ironically, because of the state's reputation as the toughest regulatory jurisdiction in the world. Operators that can meet NJ regulators' standards and licensing requirements would become the most valuable companies in the sector, and be rewarded with consumer trust, access to capital markets to help them grow, and the opportunity to become public corporations offering shareholder value.
Atlantic City and New Jersey, if it chooses, could become the global capital of "the Next Gaming industry", a hub for online commerce, as well as the high-tech jobs and infrastructure investments it would create. The integration of this new, high-tech industry with Atlantic City's resort casinos would be a powerful vehicle for driving foot traffic and revenue in this town.
Some suggest that sports betting in New Jersey be limited to the casinos. That would be a fine plan if this were 1980, and not 2010. To suggest that sports wagering be limited in that way would be to ignore what the Internet and technology has accomplished in the last decade. Instead, we should work hard to integrate the online market with the offline, Atlantic City resort casino market in a way that drives growth for both, and significant tax revenue for the state.
While all of what I have said is a recognition of the economic realities of state-regulated sports wagering, the professional sports leagues and the NCAA will continue to oppose the "expansion" of sports betting. This is no "expansion". This is a "migration", of an underground economy approaching a half-trillion dollars in size, into transparent and regulated venues.
The leagues - especially the NFL - will say that expansion of state-regulated sports wagering with threaten the inegrity of their games. That is an argument that cannot be logically sustained. So what the leagues are saying is, in effect, "leave this marketplace underground". Does that make sense? Can anyone really believe that leaving this underground economy to organized crime and street-level operators would be preferable to state regulation? No. Precisely the opposite is true. Yet the leagues continue to make this illogical argument, and probably will all the way up until the point where they sign lucrative revenue sharing agreements with betting operators like they have in European soccer.
The bottom line: there is no need for New Jersey to get out the backhoes and go on a treasure hunt for sports betting gold. It's right here, for everyone to see and benefit from. But perhaps they can help the NFL and the other leagues dig their heads out of the sand.
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