Cover The Spread: Can PA Sportsbooks Predict The Future Based On NJ’s Past?

Written By Grant Lucas on January 28, 2019 - Last Updated on May 1, 2023
PA sports betting economy forecast

Before sports betting kicked off in Pennsylvania, the public and pundits alike believed the state’s industry had the potential to be big business.

A key reason for that revolved around the state’s avid and passionate fan bases.

Now, the PA sports betting landscape, while still young, is already expanding.

Take SugarHouse Sportsbook, for example. Evan Davis, the casino’s vice president and general counsel, said the property began with a few ticket-writing windows and six self-service kiosks. That kiosk total has grown to a dozen. Davis says more are on the way, too.

“I think we always anticipated that we’d likely need more than the six that we opened with. But just the nature of the demand has been really exciting to see. So we’ve been doing everything we can to try to keep up with that demand.

“It certainly wasn’t unforeseen that we would want to order more kiosks. But just the number that we’re trying to add and how quickly we’re trying to add them …”

In its first full month of betting, the three retail sportsbooks brought in $16.1 million in wagers. Those December numbers are a good start for the state. However, when it comes to where the highest hopes for PA reside, you need to look no further than New Jersey.

How could more than $1.2 billion in handle not have such an effect?

Neighboring NJ provides optimism

Over the final four months of 2018, New Jersey reported more than $20 million in overall monthly revenue three times. Accepted wagers eclipsed $315 million in each of the last two months of the year as well.

Since launch, the Garden State, which includes PlaySugarHouse mobile sportsbook, has piled up $1.24 billion in handle, resulting in $94.2 million in revenue.

Those eye-opening figures certainly grabbed the attention of Pennsylvania operators.

“It’s safe to say that New Jersey’s numbers have given credibility to what the industry has been saying for a long time,” Davis said, “which is that there is a real appetite to have sports betting providers in a legal and regulated fashion. The proof is in the pudding, insofar as the revenue New Jersey has done. It’s really given credibility to that idea.”

Davis has already seen the excitement from SugarHouse’s existing customers. Andre Barnabei, vice president of slot operations at Rivers Casino, echoed that sentiment. The patrons’ passion for sports is certainly evident, Davis added. That, he continued, has allowed PA sports betting to begin “phenomenally.”

“We’ve seen a steady and increasing interest,” Davis said, “in the sports betting product that we’re offering.”

It’s difficult to craft PA sports betting projections

Certainly, Davis conceded, the timing of PA sports betting’s launch was beneficial.

Hollywood Sportsbook opened its doors in mid-November, followed a month later by SugarHouse and Rivers Sportsbook. Those debuts coincided nicely with the heart of college football bowl season and the tail end of the NFL regular season.

Additionally, using one jurisdiction to project another is difficult given the vastly different regulations and taxes. Davis explained:

“How that translates over into Pennsylvania it obviously remains to be seen. We’ve had a number of folks here telling us that they’re excited that they no longer have to drive to Delaware, for example, to bet, that they can do it here, closer to home. That’s great for them and for us and for the commonwealth of Pennsylvania.”

Such hesitation to predict the future is not exclusive to SugarHouse. In an email from Kambi Group, which powers four PA sportsbooks:

“All we can say is that there is certainly a thirst for sports betting in both states and it will be interesting to see the numbers over the next two weeks with no NFL games.”

Still, potential of PA sports betting remains high

A simple side-by-side comparison of the early months of New Jersey and Pennsylvania sports betting may not provide clear conclusions, but there are still some interesting takeaways.

The first month in New Jersey featured three sportsbooks, just as December did for Pennsylvania. In June, the NJ sportsbooks reported $16.4 million in handle and $3.5 million in revenue. Pennsylvania did $16.2 million in accepted wagers, resulting in just over $2 million in revenue. Granted, New Jersey operated for half the month in June, but understand that Pennsylvania’s tax rate is  22 percent higher rate than its neighbor’s highest tax rate.

By August, when New Jersey rolled out the first online sports betting products, the state saw its handle rise to $95.6 million and its revenue to $9.7 million across eight retail sportsbooks and three mobile platforms.

Obviously, straight-up comparisons are not sufficient for an educated projection. Even David Schwartz, director of the Center for Gaming Research at UNLV, said he has no insights as to the future of Pennsylvania’s industry. What Schwartz did note, however, are a few models used. One of them calculates sports betting as a percentage of gaming revenue.

In that model, he said, wagering revenue accounting for 2 percent of total gaming revenue represents “the floor” while 5 percent represents “the ceiling.” In December, that percentage stood at less than 1 percent.

The future appears bright for PA sports betting. Especially considering how much New Jersey wagering came from out-of-state users.

Lindsay Slader, VP of regulatory affairs for GeoComply, cited that approximately 80 percent of all geolocation hits for mobile customers occur within 10 miles of the New Jersey border. About 44 percent come within 2 miles.

Certainly, then, Pennsylvania could lure its residents back to their home state. And then PA sports betting, especially when online wagering launches within the next few weeks, could really take off.

Grant Lucas Avatar
Written by
Grant Lucas

Grant Lucas is a longtime sportswriter who has covered the high school, collegiate, and professional levels. A graduate of Linfield College in McMinnville, Grant has covered games and written features and columns surrounding prep sports, Linfield, and Oregon State athletics and the Portland Trail Blazers throughout his career.

View all posts by Grant Lucas
Privacy Policy