The New Jersey sports gaming industry continues to expand. On November 7, 2019, the New Jersey Division of Gaming Enforcement (NJDGE) announced that licensed gambling operators were authorized to accept bets on the League of Legends World Championship finals, one of the world’s most popular esports competitions.
Rise of the Esports Industry
The esports industry is booming, creating a wide range of new business opportunities. According to Newzoo, esports revenues will reach a staggering $1.1 billion in 2019, a year-on-year growth of +26.7 percent. Much of the growth is fueled by the rising viewership of esports competitions. A Goldman Sachs report predicts that by 2022, U.S. esports viewership will top that of all the major traditional athletic leagues, with the exception of the National Football League.
Betting on Esports
As esports grow in popularity, so does the demand to place wagers on it. Three years ago, $5.5 billion was wagered on esports competitions globally. By 2020, wagering is expected to skyrocket to $12.9 billion. For the gaming industry, esports offers an opportunity to reach younger generations, such as millennials, that have previously been difficult to reach. However, while esports betting is widely available online, regulators have been slow to embrace esports wagers in the United States.
In giving gambling operators the green light to take bets on the LOL championship, New Jersey became the second state in the country to allow esports wagers. In 2017, the Nevada Gaming Control Board authorized William Hill to accept wagers on a Counter-Strike: Global Offensive tournament. The Garden State’s first esports wager was placed at MGM Resorts International’s Borgata in Atlantic City, with a Philadelphia broadcaster placing $100 on Team G2.
New Jersey’s Sports Wagering Regulations
After the U.S. Supreme Court struck down the Professional and Amateur Sports Protection Act of 1992 (PASPA), which prohibited sports gambling in most states, New Jersey moved quickly to legalize it. Governor Phil Murphy signed legal sports betting into law on June 11, 2018. The law authorizes casinos and racetracks to accept in-person wagers, as well as establish online sports betting.
While the law initially banned wagers on esports and competitive video games, the rules have since been relaxed. New Jersey’s sports wagering regulations currently define a “sports event” on which wagers may be placed as:
“…any sport, athletic contest, or athletic event not prohibited by the Director, including all professional electronic sports and competitive video game events that are not sponsored by high schools, do not include high school teams, and do not include any participant under the age of 18 years.”
Meanwhile, a "prohibited sports event" includes “all high school sports events, including high school electronic sports events and high school competitive video game events, and any electronic sports event in which any participant is 17 years old or younger.”
Betting on esports tournaments presents difficulties for the NJDGE and gambling operators because the players are often teens. As a result, the NJDGE’s recent authorization was limited to the specific esports event. According to the agency, it “thoroughly investigated” the League of Legends World Championship as a tournament and obtained sufficient evidence of its authenticity before approving sports betting sites to take wagers. In addition, no bets over $1,000 could be made and no in-play betting was allowed.
While it may have been for just one day, New Jersey sportsbooks welcomed the opportunity. “Borgata is proud to be at the forefront of this significant milestone as we look to engage with future generations of esports fans as well as traditional sports fans,” said Marcus Glover, the President and Chief Operating Officer for Borgata Hotel, Casino and Spa. “We are grateful to the New Jersey Division of Gaming Enforcement for their partnership in helping advance such an innovative initiative.” Given the growing popularity of esports, the NJDGE will likely consider authorizing wagers on future tournaments, provided that it can verify that they don’t run afoul of the state’s gaming regulations.
For businesses looking to enter New Jersey’s legal sports betting industry, we encourage you to work with a knowledgeable New Jersey business and gaming attorney who can help you navigate the regulatory framework. As with any other new industry, there is a wealth of opportunity, as well as many traps for the unwary.
If you have questions, please contact us
If you have any questions or if you would like to discuss the matter further, please contact me, Ashley Brinn, or the Scarinci Hollenbeck attorney with whom you work, at 201-806-3364.