New Jersey has become the premier sports betting market in the country, and the state just saw a record $803 million wagered in October.
The return to a more normal, seasonal lineup of sporting events helped fuel the state's growth, which is now pulling away from other jurisdictions with legal sports wagers. And though the sportsbooks in New Jersey have retail operations set up at most of New Jersey's casinos and racetracks, the online channel accounted for 93% of the bets placed last month.
It is Flutter Entertainment's (OTC: PDYPF) FanDuel and DraftKings ( DKNG -2.33% ) that are leading the way by a large margin.
Hitting a home run
Sports betting has turned Benjamin Franklin's famous aphorism about New Jersey being a keg tapped at two ends by New York and Philadelphia on its head. Where the statesman was bemoaning the financial drain on New Jersey, its location between two massive, vibrant sports markets meant it was perfectly positioned to capitalize on them when wagering on events was made legal.
It also benefited from New Jersey embracing online betting from the start, whether on sports, poker, or other casino games.
While Nevada has allowed sports betting for decades, just as much betting occurs at the retail sportsbooks as online. Moreover, the state only permits playing poker online, not other casino games.
Perhaps because Las Vegas and Reno are more tourist-oriented, gamblers bet at the casino since they're already there. And while the local market has always been a healthy business for the state's casinos, Nevada has just 3 million residents compared to the 8.8 million in the more densely populated Garden State.
For that reason, New Jersey quickly surpassed Nevada to become the sports betting capital of the country. In October, some $744 million of New Jersey's handle came through the online channel (handle is how much bettors wager; revenue is how much the gambling companies keep).
PlayNJ sees the state being on track to beat Nevada's record of $5.3 billion wagered in a single year, as New Jersey's sportsbooks have already taken in $4.1 billion in bets year to date.
Trouncing the competition
New Jersey's growth was also assisted by FanDuel and DraftKings, which dominate the state's sportsbooks.
FanDuel is partnered with The Meadowlands racetrack in East Rutherford, just miles from New York City, and DraftKings is with Resorts Casino in Atlantic City (sportsbooks are required to partner with a physical casino or racetrack to operate in the state).
But FanDuel has outrun its rivals because, as Meadowlands owner Jeffrey Gural once noted, there are only about 1.5 million people within 50 miles of Atlantic City, while there are about 16 million people living within a 50-mile radius of his racetrack.
Not only has FanDuel's online sportsbook led, but it has the biggest retail sportsbook, too. Year to date, FanDuel has generated $133.7 million in online sportsbook revenue and almost $14.8 million in retail revenue, while DraftKings is second with $70.8 million in online revenue in 2020.
MGM Resorts' ( MGM -1.72% ) Borgata casino is actually the second largest retail sportsbook in the state with $3.5 million in revenue, but its online sportsbook is a distant third with over $18 million in revenue.
William Hill ( WIMHY ) actually has a combined presence in New Jersey that would put it into third place overall, because it has relationships with the Ocean Resort and Tropicana casinos, as well as Monmouth Park Racetrack.
FanDuel, though, will be opening a retail sportsbook at Bally's before the end of the year, further expanding its reach.
Only just beginning
The online operations of FanDuel and DraftKings were perfectly positioned to reap the benefits of a gambling market turned upside down due to the coronavirus pandemic that kept consumers out of casinos and racetracks for months.
Not only are they New Jersey's biggest sportsbooks, but they're also the largest nationally, accounting for about 75% of the market share between them.
Now that Maryland, Louisiana, and South Dakota just voted to legalize sports betting within their borders, bringing the total number of states allowing wagering on sporting events to 24, investors should see FanDuel and DraftKings capitalize further on the opportunity to expand.