New Jersey’s economy is being negatively impacted by the gambling boom, report says

A new report questions what real impact New Jersey’s gambling boom has had on the state’s economy.

Last updated: January 8, 2024, 1:28 p.m. ET
Reading time: 4 minutes

A new report on the economic impact of a widely publicized gambling boom in New Jersey has surprising findings.

The report, commissioned by the Campaign for Fairer Gambling and shared by The Guardian’s Callum Jones, examines how a surge in online gambling in the state has transformed the economy and what the real impact of this gambling boom has been.

New Jersey has seen a significant increase in tax revenue recently, all due to the introduction of legalized sports betting in the state. By legalizing sports betting, New Jersey was able to raise money by taxing the sector. And soon hundreds of millions of dollars were raised as a result.

The problem, however, lies in the overall impact of this surge in sports betting. The report suggests that while the increase in tax revenue has been positive for the state as a whole, its impact is overshadowed by the associated rise in problem gambling in New Jersey.

Problem gambling comes at a high price, and as gambling addiction increases rapidly, so do the associated costs.

Any increase in gambling will lead to an increase in problem gambling, and the associated costs cannot be ignored. Gambling addiction inevitably leads to higher health and social costs and leads to an increase in homelessness and crime.

Costs and effects

While online casinos in New Jersey actually contributed $385 million in net taxes in 2022, analysts have calculated that the social cost of the recent surge in problem gambling could reach $350 million.

In addition to the problem of gambling, research focuses on the real economic impact of recent changes. Analysts found that while $2.4 billion was spent on online gambling in 2022, that spending actually led to a decline in economic activity in New Jersey. The reduction is estimated to be around $180 million.

The report goes on to say that online gambling simply “does not produce the kind of positive economic knock-on effects that other discretionary industries achieve.” And that’s largely due to the impact of online gambling spending on wages.

Of course, wages are paid when gambling online. It was calculated that online gambling wages totaled $110 million during 2022. However, this figure pales in comparison to the wages that would have been paid if the money spent on online gambling was used for other leisure activities such as hospitality or leisure. Such activity would have resulted in $2.4 billion in payroll spending and $200 million in new spending in the state’s economy.

However, some are not so quick to accept the report’s findings. Jeff Ifrah, founder and general counsel of iDEA, suggested thinking about what the social cost of problem gambling would have been if online gambling had not been legalized.

“Without legalized iGaming, consumers turn to illegal offshore websites that offer no protection to players and no economic benefits to the state,” Ifrah said.

Pages on this topic

Source link