Sports Betting Is Providing States With Much Needed Revenue

early winners US sports betting market

According to the latest American Gaming Association research report, sports betting operations saw a 47% year-over-year revenue increase in the third quarter of the year, providing states with some much-needed revenue as they continue to deal with COVID-19 outbreaks.

The Q3 results also stand in stark contrast to Q2, when Sports leagues and games were practically dormant. Their return could not have come at a better time for cash-stressed states. 

A Tax Policy Center report showed that 35 out of 50 states are experiencing overall tax revenue declines. Lawmakers in states on the fence about legalizing sports betting and online gambling are likely to become more sympathetic to the idea in the age of COVID-19, especially as it seems that the industry could be heading towards a second shutdown.

Growing Appetite for Sports Betting

In Q3, sports betting operations provided higher tax revenue in multiple states that are in desperate need of funds to offset spiraling unemployment rates, crippling economies, and funding essential programs from education to health care.

The senior director of research at the AGA, Dave Forman, told BloombergTax.com:

“Sports betting is having a great year, and there’s a lot of enthusiasm for it. The sports calendar is kind of wonky right now with leagues changing schedules, so quarter-to-quarter comparisons are tricky, but the uptick speaks to the growing appetite for betting on sports.”

As the Bloomberg article notes:

  • Pennsylvania and several other states reported that they collected their most bets ever in October 2020. This is even more impressive, considering pandemic-related restrictions and social distancing limited in-person betting.
  • New Jersey online gambling is on track to break the $5.3 billion annual record set by Nevada in 2019. The Garden State collected $800 million in October – its highest monthly mark to date – thus generating $7.4 million for state coffers.

Potentially New Sports Betting Markets … and Tax Revenue

Legal sports betting is on track for 26 states and the District of Columbia by next year, following successful ballot campaigns in several states. And by this time next year, the US could be looking at as many as 35 states with legal sports betting.

  • As noted, there were the recent ballot votes saw Maryland, Louisiana, and South Dakota adopt new sports betting legislation. Their markets are expected to go live in 2021-2022.
  • Massachusetts has been examining sports betting, and if nothing gets done in 2020, the state is expected to take up sports betting in 2021.
  • Several other states from Georgia to New York are also expected to consider sports betting during the 2021 legislative session.

“Legislators in a couple of states have moved things forward and more are discussing sports betting in light of the pandemic’s effect on revenue,” said Forman.

Last year, sports betting taxes from 14 states brought in $118 million.  With total sports betting revenue expected to reach $5 billion in 2023, tax revenue numbers will climb accordingly.

Professional Sports Leagues Relax Traditionally Tough Stance on Sports Betting

Sports leagues were once among the most vigorous opponents of legal sports betting. For years, they fought New Jersey until the state successfully had the Supreme Court overturn the Professional and Amateur Sports Protection Act in May 2018.

However, the opportunity to cash in on sports betting has seen the sports business world perform an about-face on this policy. They now permit betting sponsorships for colleges and professional teams and are partnering with sports betting operators in all manner of ways. 

Sports Betting Streak Expected to Continue

COVID-19 saw significant cancellations and postponements across the board in the sports world, but they returned with a vengeance in the third quarter of the year. Aided by the most robust sports schedule ever seen, states such as New Jersey managed to bounce back with record numbers.

Most agree that the best is yet to come, considering that the NBA and college winter sports are scheduled to restart in the coming weeks. While the NFL traditionally generates the most handle, basketball’s large fan base and volume of games provide massive revenue potential.

Related: The Impact Of Sports Betting Goes Beyond Revenue

Similar Posts