It’s been one year since the U.S. Supreme Court overruled a decision that limited sports gambling to the state of Nevada, and a lot has certainly happened in this 12-month span.
While college and pro sports leagues seem to be split on legalized gambling as it pertains to their games, ESPN, the worldwide leader in sports, is going all-in on a future that involves gambling as a big part of it.
Evidence of this is ESPN’s recently announced plans to build a sports gambling TV hub on the Las Vegas strip in the area once occupied by the Imperial Palace. To date, Fox Sports 1 and ESPN have begun running daily shows focused on sports betting.
Let’s take a look at what’s happened over these past 12 months and break down the benefits (and drawbacks) from the states that have legalized sports gambling:
The Basics
Ever since the Supreme Court overturned the single-game sports betting ruling on May 14, 2018, numerous states drafted — and passed — legislation to legalize gambling. In this year, seven states (plus Nevada) now allow sports gambling within state lines — and total bets have accrued about $8 billion worth of total revenue.
While only a handful of states allow legal sports betting today, it’s projected that 70 percent of all U.S. states will have some sort of legislation in place by 2024. There’s some major incentive for states to pass legislation legalizing sports gambling, as it would help improve state revenue by way of its tax base. This increase in the tax revenue pot could be passed on to fund education, road construction and more.
Of the four main American professional sports leagues — NHL, NBA, MLB and NFL — the NBA, MLB and NHL have already announced partnerships with various sportsbooks across the country, while the NFL remains adamantly opposed to legalizing betting nationwide.
How Much Have States Earned?
First, it’s important to note that each state that has legalized gambling revenue handles it differently. For instance, in Delaware, the state receives 50 percent of the revenue from gambling. In West Virginia, the tax rate is 10 percent for wagers placed, which the state receives. In Pennsylvania, the tax rate is 36 percent for all online and land-based wagers.
So, has legalizing sports gambling paid off for the states that have done it?
The answer: It depends.
According to Yahoo! Finance, only about half of the states that legalized sports gambling have found the revenue to come in near what they initially projected, which can be viewed as a disappointment to some. However, for those that didn’t meet their projections, there are states that have greatly surpassed them.
New Jersey, for instance, is one of these states, as it is planning to collect some $20 million in additional tax revenue from legalized gambling against a $12 million projection. Delaware is another state that is poised to surpass its initial estimate of $5 million.
Other states, however, aren’t faring quite as well. West Virginia had hoped to gain about $5 million more in tax revenue, and it’s looking like it will earn less than $1 million. Rhode Island is a state that’s way, way off on its original projection of $23.5 million, as it’s currently on track to bring in only about $700,000.
So what’s the different between the states that are hitting — or exceeding — their targets and those that are not? It largely comes down to consumer gambling options and consumer awareness. New Jersey, for instance, was among the first states to legalize sports gambling after the Supreme Court’s reversal. The state’s decision was met with great fanfare, and it allows consumers to place both land-based and online wagers. Online gaming options appear to be one of the key factors that are helping states exceed their revenue goals versus those that restrict gambling options.
Moving forward, there are a few challenges for all states with legalized sports gambling. The ones that are succeeding at it will have to keep up the momentum so the novelty of it doesn’t wear off. The ones that are struggling will have to offer more wager options if they want to really cash in on the full potential.
Regards,
Ethan Warrick
Editor
Wealth Authority
