How much tax did the US gambling industry pay in 2019?

American Football

In 2018, the US Supreme Court paved the way for nationwide legalised sports betting by lifting a 25-year-old ban on sports wagering outside of Nevada.

The move gave individual states the right to create their own laws regarding sports betting. Some states reacted by immediately pushing new legislation and opening their doors to sports betting, while others are either looking at their options or have rejected the idea of legal sports betting altogether. The move also paved the way for further changes in the regulation of all forms of betting across the US.

But what difference did this new legislation make to the total amount of tax paid by the gambling industry across the country? Some predicted the rise would be negligible, while others suggested participating states would receive a huge boost from legal betting. To get an idea of the numbers, we can take a look at a few examples of key states that now offer sports betting.

By the end of 2019, only three states (Delaware, Pennsylvania, and New Jersey) offered regulated online betting for slots, poker and casino table games, while nine states (Nevada, New Jersey, Pennsylvania, Rhode Island, West Virginia, Oregon, Iowa, Indiana and New Hampshire) offered online sports betting and 13 states offered some form of sports betting.

Sports betting in Pennsylvania

In Pennsylvania, where sports betting has been legal for one full year, bettors placed around $1.5 billion in wagers, delivering $30 million in tax revenue for the state. In the last month of 2019 alone, more than $342 million was wagered on sports events.

The end-of-year spike can be attributed to the growing number of online sportsbooks operating in the area and the popularity of online wagering which made up around 86% of the total handle in December. Experts have predicted that the handle could reach $4 billion in 2020. Only New Jersey and Nevada outperformed Pennsylvania for total gambling revenue in 2019.

New Jersey embraces sports betting

In New Jersey, where gambling laws have historically been more lenient, the sports betting handle for 2019 exceeded $4.58 billion. These figures – released by the Division of Gaming Enforcement (DGE) – covered mobile and land-based sports betting operations and produced over $36.5 million in taxes for state and local governments.

The numbers showed that the majority of bettors now wager via the internet with $3.83 billion of that number wagered at mobile sportsbooks. It is clear from this that mobile wagering is set to dominate in the future. The most popular sport amongst bettors was American football followed by basketball and the most popular bet type was the parlay (where the bettor chooses not just one but two or more teams that they believe will win).

Indiana opened doors in September

The gambling industry positive effects such as economic revenue boosts and increased employment opportunities have prompted many other states to review their current gambling laws. One such state was Indiana which opened its doors to legal sports gambling in September.

During the first four months of legal sports wagering in the state, Indiana residents wagered $436 million. That’s more than the advertising revenue generated by the Super Bowl LIII alone. The launch of the first sportsbooks coincided with the start of the NFL, NBA and college football and basketball seasons. It is suspected that gamblers from neighbouring states also boosted those numbers.

Mobile betting launched in the state in October, making Indiana one of only three states, along with New Jersey and Pennsylvania to offer genuine sports gambling on the go. Nearly 70% of all bets during the first four months were placed via apps on mobile devices. Like in other states, Indiana bettors favoured football bets over parlays and basketball wagers. In total, gambling in the state generated $3.7 million in state tax revenue.

The future

With sports betting still in its infancy, it is clear that bettors prefer to wager via mobile apps with over 80% of all sports bets expected to be placed via mobile devices in 2020. Online sports betting is only available in nine states at the moment but that number is expected to increase over the next two years as further legislation is passed in states where legal processes were slower in 2019 for various reasons.