Winning by losing

2020 was the second year in the row that the house in New Jersey lost money on Super Bowl bets. Nonetheless, gaming industry insiders and regulators are satisfied with the outcome. Maybe even excited.

The sportsbooks, said Dustin Gouker, an analyst for PlayNJ.com, don’t care if they make money on the Super Bowl. “They’re just trying to acquire new customers,” he said. “That’s kind of how you get started in the market, willing to take losses now in order to make gains as the market matures.”

The tools include promos and advertising, marketing and giveaways, souvenirs and low-risk bets that casinos and racetracks will offer to would-be casino customers.

For Super Bowl LIV on Feb. 2, won by the Kansas City Chiefs, the state’s casinos and racetracks took in $54,288,227 of wagers but paid out $58,568,699 in winnings. The numbers add up to a loss of $4,280,000 for the house, according to preliminary numbers released on Feb. 3 by the state’s gaming regulators.

Complete data on how much was bet and won during the Super Bowl will not be available until the Division of Gaming Enforcement, which oversees much of the state’s sports betting market, puts out the full financial reports next month on how the casinos and racetracks fared overall in February.

As of January, two racetracks and eight casinos operate physical sportsbooks where patrons can place wagers; the two tracks and seven of the casinos also accept online and mobile wagers. Many of those establishments do business with multiple online companies, and there are a total of 19 online sportsbooks.

Monmouth Park Racetrack, for example, runs an in-person sportsbook and offers options for internet wagers via U.K. bookmaker William Hill, sports betting apps theScore Bet and PlaySugarHouse, according to the DGE.

Many of the state’s regulatory and data-reporting functions are carried out by the DGE, but the Casino Control Commission also plays a role.

“A lot of people were in town” during the Super Bowl, CCC Chair James Plousis told NJBIZ. “They spend a lot of money on food and other entertainment. … Sometimes the house loses, sometimes they win. I think that helps build brand loyalty. If you win, you want to come back.”

Patrons have wagered billions of dollars in New Jersey’s sportsbooks ever since a landmark U.S. Supreme Court case struck down a near nationwide ban on sports betting. Most of the money has flowed through the online and mobile apps.

‘Get people in the door’

At Super Bowl LIII last year — the first championship game New Jersey residents could legally bet on — patrons wagered nearly $35 million at the state’s 10 in-person and 11 online and mobile sportsbooks, but took home just shy of $40 million in winnings. That produced a $4.6 million loss, or 13.11 percent, for the house, compared to a 7.8 percent loss at the 2020 Super Bowl.

“If you’re a sportsbook, you’re just trying to get people in the door. There’s obviously a lot of competition,” Gouker said. “Once you’ve touched base with a customer, you have ways to talk to them, try to activate them through” email and other marketing.

Gouker cited Pennsylvania, which began taking in-person sports wagers in 2018 and then online bets last May, where the results have been similar to those in New Jersey. Patrons wagered $30.7 million at the Keystone State’s online and physical sportsbooks, but won a combined payout of just over $34 million, marking a $3.3 million loss for the house, according to the Pennsylvania Gaming Control Board.

Compare that to the Nevada and Las Vegas sportsbooks, which have been open in one form or another since 1949 and consistently rake in profits from Super Bowl wagers.

On Feb. 2, the sportsbooks won $18.7 million out of the $157.7 million on Super Bowl wagers, according to the Nevada Gaming Control Board. Nevada sportsbooks won $10.7 million out of the nearly $146 million wagered at the 2019 Super Bowl; generated $1.17 million out of $158.6 million bet during the 2018 Super Bowl; almost $11 million out of $138.5 million during the 2017 Super Bowl; and $13.3 million out of the $132.5 million bet on the 2016 Super Bowl.

“I think that’s part of it — them ramping up, getting situated all the way around,” Plousis said of New Jersey’s sportsbooks.

But former state Sen. Raymond Lesniak, a Democrat who sponsored several bills over the years to legalize sports betting in New Jersey including a successful statewide referendum in 2011, said the NCAA’s March Madness basketball tournament next month should be a cash cow for the sportsbooks. “It’s not a question of whether the sportsbook wins or loses money,” he told NJBIZ. “It’s a question … of bringing excitement and patronage into the casino.

“It’s not even a question of making up for it,” the former state senator added. “[S]portsbooks have been around for a long time and they’re still in existence. If they kept losing money they wouldn’t be in business.”

The month-long tournament is arguably the most popular betting event of the year. By the end of March 2019, patrons bet $492 million on basketball, compared to just shy of $114 million on football, according to the DGE.

But by the end of 2019, both basketball and football brought in near identical wagers: $935 million and $939 million respectively.

Many sportsbooks said they offered top-of-the-line products during the Super Bowl. “FanDuel customers won more than $2 million on the game’s Moneyline and Spread markets,” the sportsbook said in a Feb. 2 statement. “Patrick Mahomes scoring a touchdown was the biggest prop bet win for our customers. Plus, the adage ‘Tails Never Fails’ proved true, delivering $200,000 in the accounts of FanDuel Sportsbook customers before kickoff.”

And the Casino Association of New Jersey, a trade group representing the state’s gaming houses, highlighted dozens of product offerings by casinos that offer sportsbetting during the Super Bowl: Bally’s Wild Wild West Casino; Borgata’s Hotel and Casino Atlantic City; Golden Nugget; Hard Rock Hotel and Casino Atlantic City; Harrah’s Resort Atlantic City; Ocean Resort Casino and William Hill; Resorts Casino Hotel and DraftKings Sportsbook; and Tropicana Atlantic City.

“There’s a lot of traffic, a lot of action going on, a lot of people moving around. It brings a whole total atmosphere” at the casinos because of sports betting, Lesniak said.