Analysis of NERA Economic Study
A comprehensive review of NERA's study on iGaming economic impact
A recent study by National Economic Research Associates (NERA), commissioned by the Campaign for Fairer Gambling, utilized data from a 2019 study by Meister Economic Consulting and Victor-Strategies and incorrectly concluded that iGaming has been detrimental to New Jersey's economy. After a comprehensive analysis, commissioned by iDEA and supported by industry data and research, NERA's study was found to be critically flawed, inaccurate, and misleading due to its reliance on incomplete and limited data, illogical assumptions, faulty methodologies, and computational errors, rendering its conclusions unreliable.
The 2019 Meister Economic Consulting and Victor-Strategies study - which employed a robust methodology and complete data set to comprehensively assess economic impact - remains valid and provides valuable insights on the benefits of regulated online gaming for the state's economy. NERA's recent study on the economic impact of iGaming in New Jersey cannot be relied upon to inform public policy or business decisions.
Key Findings
- NERA's analysis of iGaming's economic impact is based on limited wage data from only 2 operators over 3 years (there were 5 licensed iGaming operators; operating 10 platforms; with 15 different brands in New Jersey in 2016 alone), which fails to represent the entire industry accurately. In contrast, the 2019 Meister Economic Consulting and Victor-Strategies study utilized a thorough, complete data set and a robust, widely accepted methodology to estimate the impact of iGaming on New Jersey’s economy.
- NERA’s study incorrectly assumes that iGaming cannibalizes revenue from brick-and-mortar casinos and other entertainment sectors and does not point to any research that supports this claim. In fact, previous research has shown that there is not significant substitution across segments of the gaming industry, nor across to other non-gaming industries. The report also ignores the reality that iGaming redirects revenue from illegal online gambling sites, resulting in NERA’s assumption vastly underestimating the economic contribution of iGaming in New Jersey.
- Contrary to NERA's claims, multiple studies demonstrate that iGaming complements brick-and-mortar casinos, with many operators reporting increased customer engagement and revenue after introducing online gaming. Findings from the 2019 Meister / Victor-Strategies study align with this growing body of evidence, suggesting a complementary relationship between online and land-based gaming.
- NERA's methodology relies on a simplistic, wage-focused model that fails to capture the full scope of economic benefits generated by iGaming, leading to a significant underestimation of its positive impact on New Jersey's economy. The 2019 Meister / Victor-Strategies study employed a well-established input-output methodology that is widely used by governments, businesses, and consultants to comprehensively capture the direct, indirect, and induced effects of projects and events on an economy, including output, jobs, wages, and taxes.
- NERA's $350 million annual social cost estimate for iGaming in NJ is derived from a discredited 2023 British study by the National Institute of Economic and Social Research (“NIESR”) that incorrectly classified wealth transfers as social costs and disregarded the high comorbidity rates among problem gamblers such as substance abuse and personality or anxiety disorders. In addition, the NIESR study is riddled with data, methodological, and computational problems so serious that the NERA social cost estimate is effectively arbitrary. NERA did no independent research on the social costs of gaming in the United States. Instead, they inappropriately applied dubious and inflated social cost estimates from the U.K. to the U.S., where there are vast differences in the gaming industry and social welfare system. The 2019 Meister / Victor-Strategies study did not attempt to quantify social costs, recognizing the inherent difficulties and limitations in doing so accurately.
NJ Economic Impact Study
iDEA's proprietary research quantifies the economic impact and assesses the social impact of legal online gaming in the state of New Jersey. This groundbreaking study has been updated for 2020 and includes data from six years of legal, regulated online gaming in the state. New Jersey’s experience provides valuable lessons for other U.S. states in creating an operating environment and regulatory structure to implement, oversee, and realize the benefits of responsible, regulated online gaming.
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