Apr 22, 2019 - Sports

States see disappointing tax revenue from legal sports betting

Illustration of a stack of digital poker chips next to a smaller stack of real poker chips

Illustration: Rebecca Zisser/Axios

Six states have legalized sports betting since the Supreme Court's monumental decision last May, but New Jersey is the only one exceeding revenue expectations.

Why it matters: These disappointing results are part of a "growing consensus that legal sports betting may not bring the windfall that economic forecasters predicted only a few months ago," the New York Times' Timothy Williams reports.

By the numbers: West Virginia has collected only a quarter of the monthly tax revenue it projected, and Pennsylvania and Mississippi have collected only half.

  • Rhode Island has done even worse, bringing in $50,000 per month after predicting they'd bring in almost $1 million.
  • Delaware is meeting projections, but it's thanks in large part to a football-betting operation that's been around since 2009.

Be smart ... The real story here is New Jersey, which has brought in more than $2 billion in the last 10 months thanks to one simple fact: New Jersey allows bettors to place online bets from their smartphones.

  • Meanwhile, most of these struggling states require bettors to place their bets in casinos, which — surprise, surprise — nobody wants to do. Other states like Pennsylvania have legalized mobile betting but still don't offer it.
  • Following New Jersey's lead and getting mobile sports betting up and running seems like the obvious answer to these states' revenue problems. Unfortunately, a little something called politics will make that a slow and complicated process, as casinos continue to apply pressure on legislators.

The big picture:

"Right now, I'd say the [casino-only] camp has more momentum simply because many policymakers aren't comfortable with online gambling. Fast-forward a couple years, and I think we'll see a lot of [casino-only] states adding online as they see that online is where the customer — and therefore, the tax revenue — predominantly resides."
— Chris Grove, managing director of sports and emerging verticals at Eilers & Krejcik Gaming

The bottom line: In 2019, people want to bet through an app from the comfort of their couch instead of getting in their car and driving to a run-down casino. Who knew?!

Go deeper: Sports betting is only going to get more mainstream

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