NJ to Vote on In-State Collegiate Sports Betting in November

On November 2nd, New Jersey voters will be participating in a gubernatorial election, where they’ll also cast ballots for 120 Senate and Assembly seats. As important as this day will be for New Jersey’s future leadership, it is even more significant for local gaming expansion in the Garden State.

During the electoral exercise that’s due in about two weeks, voters will also be answering two questions that aim to amend New Jersey’s Constitution on matters gambling. The first question touches on the expansion of gambling to allow locals to wager on in-state collegiate teams and sporting events. Currently, the state law (ratified in 2018) only permits locals to bet on out-of-state college teams and collegiate sporting competitions outside state lines.

For the second question, voters will be asked whether or not the state should let non-profit entities fund their operations with proceeds generated from conducting games of chance such as raffles or bingos. Currently, the proceeds collected from such gaming activity can only be channeled to charitable commitments.

The non-profit entities here include charitable, fraternal, civic, and religious institutions, as well as rescue or first aid squads. Right now, only veteran and senior citizen organizations are allowed to direct their proceeds from gaming activity to their operations.

What Led to the Change of Heart for New Jersey’s Lawmakers?

When legislators in the Garden State were drafting the original gambling law, sports betting on local college teams and events was out of the question. Lawmakers involved feared that if the state allowed gambling on in-state collegiate events and local teams, student-athletes could end up being subject to match-fixing.

But then, the U-turn on this line of thought was strengthened when the National Collegiate Athletic Association (NCAA), the non-profit oversight body for student-athletes, updated its policy on June 30th. During the NCAA policy update announcement, Denise Trauth, Division I Board of Directors Chairperson and President at Texas State, said:

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“Today, NCAA members voted to allow college athletes to benefit from name, image, and likeness opportunities, no matter where their school is located. With this interim solution in place, we will continue to work with Congress to adopt federal legislation to support student-athletes.”

In a nutshell, the rewritten policy permitted college athletes to receive compensation from endorsements and commercials where they are featured. However, it’s worth highlighting that the NCAA policy change was driven by a US Supreme Court ruling that barred it from blocking the said compensations. The idea behind the about-face on collegiate betting is that introducing compensation lowers the risk of the possible effect of gambling on the performance of student-athletes.

A Treasure-Trove for New Jersey Tax Coffers

Of course, money was also a significant factor in the legislative volte-face. Lawmakers have been seeking to rewrite the college sports betting law because of the potential tax revenue that the Garden State would generate from wagering on in-state collegiate sporting events and teams.

New Jersey presently levies an 8.5% tax on retail sports wagering that’s allowed in brick-and-mortar casinos, land-based sportsbooks, and racetracks, whereas internet betting attracts a 13% tax. According to data compiled by the New Jersey Division of Gaming Enforcement, sports betting, both online and retail, brought in around $50 million for the state in 2020. With an expanded collegiate sports betting market, a lot more revenue is expected to be directed into the Garden State’s tax coffers.

In support of the revenue collection angle, Senator Vin Gopal, the state representative for the 11th Legislative District in Monmouth County, said:

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“Sports betting generates a large tax revenue for New Jersey, and sports betting operations pay a 1.25 percent tax that goes to towns and counties. That is money that goes towards economic development, including road improvements, transportation and infrastructure, tourism, public safety, and properties located on or near the racetrack.”

Senator Gopal is a primary sponsor of the resolution that’s mobilizing New Jersey voters to greenlight the constitutional amendment in the November ballot.

Talking of expanded college sports betting as a revenue stream for tax income, legislators in New Jersey are particularly eying the NCAA Men’s Basketball Eastern Regional Tournament scheduled for 2025 in Newark. This is a betting goldmine that lawmakers hope to leverage to bring in as much revenue as possible for New Jersey.

Senator Paul Sarlo, the state Representative for the 36th Legislative District, commented that cutting the state out of a gambling event of such a magnitude would be denying the state an incredibly lucrative opportunity. He said in a statement:

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“Some of the top teams in 2025, whoever they may be at that time, will be here. I’m sure there will be a lot of activity throughout the country and betting. We just felt it was not fitting for us to sit back and not be able to collect that revenue.”