[UPDATE below with link to a deeper analysis of the case for high or low numbers here]
The arrival of online gambling in New Jersey will add $180 million in tax revenue to the state?s bottom line in the next fiscal year ? so says the Governor Christie administration, based in large part on a Wells Fargo study from January.
But two other studies came up with almost the same ? very different ? number. That is, about $40 million in first-year revenues from online gambling.
And if they are right, the hole in the budget will surely be even deeper than that:
That?s because those studies are based on a first full year, while the fiscal year for New Jersey begins on July 1.
Raise your hand if you think New Jerseyans will begin gambling online by July 1. Even Joe Brennan, the iMEGA lobbyist (no relation), doesn?t predict that.
If the kickoff is Nov. 26 ? that legal ?get it done by? date being a far more likely scenario ? and the studies by Gambling Data and Econsult are right, then the fiscal year payoff will be only about $20 million ? not $180 million.
I haven?t figured out why the administration worked off an estimate of $1.2 billion in the first year, even as they note that Wells Fargo foresees a $1.5B annual figure in five years. That report?s start-up year figure is $650 million to $850 million, which seemingly should have been the figure to use for an estimate.
It?s true that no one really knows how quickly online players will flock to the games once introduced. What could fuel an unexpected first-year bonanza is an instant embrace of the official websites by the former players on sites like PokerStars, and a potentially unforeseen big market of new players who have been itching to play ? but held back because of the murky legality of the previous era.
And I suppose it?s possible that the launch could come this fall and not at the end of the year. But I wouldn?t bet on it.
One fun thing about that Gambling Data report ? which clearly is a scholarly, scientific research effort ? is that they unsurprisingly looked to foreign markets to start a baseline of expectations, since no U.S. state has yet implemented online gambling.
One European country has the same basic gross gaming revenue tax rate of 15 percent as New Jersey ? and has enough similarities that the adjustments needed to account for demographic differences is not too difficult.
That country, as it happens, is ?. Italy.
Think it?s no coincidence for the Soprano state to be compared to Italy of all places? Fugheddabout it. It is a coincidence ? and fun.
Meanwhile, Chris Grove at Online Poker Report has that detailed analysis. Probably the most important point he makes is that the numbers could hinge heavily on whether PokerStars? parent company is approved this summer to take over The Atlantic Club. That would open the door for PokerStars to offer its well-known brand as home to newly-legalized online gambling ? a big boost for the state?s first-year tax revenues, one would assume.
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