The iDevelopment and Economic Association (iDEA) is responding to a study on the impact of iGaming on New Jersey’s economy.
The association has released the Comprehensive Analysis of NERA’s Study on New Jersey’s iGaming Economic Impact, a research summary contesting a report by the National Economic Research Associates (NERA) that determined iGaming is detrimental to the Garden State’s economy. The iDEA summary concludes the NERA study was inconclusive due to several factors including incomplete data and computational errors.
The iDEA commissioned Meister Economic Consulting, Victor-Strategies and Regulus Partners to analyze the NERA study, which was released at the end of last year.
“NERA’s study on the economic impact of iGaming in New Jersey is deeply flawed and cannot be relied upon to inform public policy or business decisions,” said Gene Johnson of Victor-Strategies. “Our comprehensive review, supported by copious industry data and research, demonstrates that NERA’s conclusions are inaccurate and misleading.”
Not enough information from NERA
The iDEA study believes the NERA didn’t provide comprehensive data that offers a proper outlook of New Jersey’s iGaming market. The NERA surveyed only two operators over a three-year period. During the time when the NERA collected data, New Jersey was home to five iGaming operators that provided oversight to 15 different gambling brands.
The iDEA also cites problems with the NERA study’s inclusion of Great Britain’s gaming market. The association believes the NERA overestimated social costs of Great Britain leading to an additional overestimation of costs in New Jersey. The iDEA research also concluded that the NERA used a relatively small data set to estimate social costs in both regions.
NERA addresses cannibalization
The NERA’s study touches on cannibalization within the gaming industry as brick-and-mortar casinos attempt to keep players at their facilities instead of gambling elsewhere. The iDEA refutes the NERA study saying that it erroneously assumes that iGaming takes away revenue from retail casinos and other gambling-focused entertainment verticals. It also addresses in its summary that the NERA fails to cite that regulated iGaming keeps money out of the pockets of illegal gambling operations while contributing to the economy.
According to a 2019 study conducted by Meister and Victor-Strategies, New Jersey’s iGaming market generated $2 billion in economic output between 2013 and 2018. During that span, iGaming in New Jersey supported 6,552 jobs and $401 million in wages. Regulated iGaming also contributed $259.3 million in tax revenue to the state. The iDEA’s summary finds that the estimates were based on a complete data set and methodology.
iDEA finds the regulation of iGaming keeps money out of illegal offshore sites that are prevalent across America. According to data provided by The Innovation Group, roughly 30% of the nearly 5,000 U.S. residents surveyed gamble exclusively with illegal vendors. Out of the surveyed residents, about 18% play in both illegal and legal channels.
“One advantage of state-regulated iGaming over illegal providers is that customers may prefer to patronize established brands with which they are familiar,” said the authors of iDEA’s report. “There is also legal recourse in the event the customer experiences any ‘irregularities’ with the online games. The same cannot be said of illegal or offshore gambling providers.”
Problem gambling concerns
The iDEA summary also takes issue with the NERA report suggesting an increase in problem gambling rates due to the availability of iGaming in New Jersey. The NERA uses a claim that iGaming is “marketed more aggressively than traditional casinos.” Despite the suggestion that iGaming in New Jersey will lead to an increase in problem gambling, iDEA cites the NERA report’s inability to provide evidence to support the claim. iDEA cites a review by Sally Gainsbury that finds “internet gambling in itself is not harmful.”
The NERA study fails to address the complete social and economic impacts of iGaming in New Jersey, according to the iDEA. As a result of “biased methodology and illogical assumptions” in the NERA study, the iDEA believes it can’t provide reliable conclusions.
