New Jersey just shot itself in the foot. And it did so while aiming at something else.
Assembly Bill 5447, which slipped through the legislature with barely a whisper, was supposed to go after dual currency sweepstakes operations. OK, fine. But tucked inside the bill is a provision that may end up doing real damage to its legal sports betting market.
The issue? The bill makes it a disorderly persons offense — similar to a misdemeanor that industry veteran Joe Brennan Jr. calls it a “spit on the sidewalk charge” — for anyone to risk $1,000 or more on a bet if they’ve agreed to pay at least 10% of the winnings to someone else. In other words: syndicates, staking agreements, teams of sharp bettors, proxy bettors, beards, whatever you want to call it.
The people who actually move markets and keep the wheels turning? Banned.
“They’ve made the market smaller,” said Brennan, who helped lead the charge for New Jersey’s (and America’s) sports betting legalization. “I’ve got pros calling me right now saying, ‘I’m not going to bother betting in the New Jersey market.’ Syndicates, arbitrage bettors — their liquidity is going to go elsewhere.”
Here’s the facepalm emoji part: This is happening at the same time New Jersey is raising its sports betting tax rate to 19.75%. So the state is chasing more revenue while actively pushing out the people who generate it.
Brennan estimates the impact could be in the ballpark of “a double-digit percentage of total handle.”
“You’ve just negated your tax increase, didn’t you?” he said if it climbs as high as 20 percent. “You end up with a zero net gain.”
There’s also some real irony here. The same sportsbooks that argue unregulated, offshore betting is a threat — and that legal markets are the solution — are the ones pushing policies that make the legal market less appealing to the people they’re trying to convert.
“Your black market, unregulated market is going to grow,” Brennan said. “The offshore sports betting guys will benefit because you just made it a criminal offense, which is ridiculous.”
Private preferences, public power
What really bothers Brennan is the way the bill seems to blur the line between public regulation and private interest. Under A5447, New Jersey’s Division of Gaming Enforcement is effectively being asked to enforce operator preferences — not public protections.
“These are the terms and conditions that DraftKings and FanDuel and the rest already enforce on their platforms,” Brennan said. “But now the state is stepping in and backing them up. Why is New Jersey agreeing to be the bouncer for recreational sportsbooks?”
The bill doesn’t stop at proxy betting, either. It also expands the definition of “swindling and cheating” to include placing a bet with “information not available to the general public.” That’s vague enough to potentially include everything from injury news on the social media site X to TV analysts making picks on the pregame show.
“You could charge Jason Kelce with a crime for picking a winner on the air,” he said. “You could charge all the touts. All the Discord guys. Anyone who bets with an edge.”
There’s also a deeper issue Brennan raises, one that could end up in court. He argues the law might violate the Constitution by creating unequal rights between corporations and individuals. He points to the Citizens United decision, which affirmed that corporations have rights of speech and association — including pooling money for political action.
“If you and I want to pool our money and bet together based on our strengths — I’m good at baseball, you’re good at basketball — that’s now a crime,” he said.
It’s not a stretch to see how that could be challenged down the line.
Going backward
New Jersey was the pioneer. It fought the feds all the way to the Supreme Court to legalize sports betting. And it built a model that became the blueprint for much of the country.
Now it’s moving backward — not because of careful public policy, but because provisions like these were tacked onto a bill targeting a different problem entirely.
“New Jersey has heretofore not been the kind of market that had those kinds of values,” Brennan said. “I’m really concerned with how blithely this was passed through.”
The state wanted more money from sports betting. But instead of growing the pie, this bill may just chase off the people who are responsible for bringing the butter and eggs.
Put simply: You can’t tax what isn’t there.
