Sports Betting Will Be No Home Run for State Budgets
Dozens of states are expected to consider legalizing sports betting this year, but they should not expect it to provide a windfall for their budgets. Seven states joined Nevada in legalizing sports gambling after the U.S. Supreme Court allowed it last year. Their experience shows that it provides just a fraction of overall state tax revenue. As the market quickly expands, that is likely to be diluted even further.
Associated Press
Don’t bet on it.
Just look to the states that capitalized immediately after the court’s ruling last spring and to
In
“Everything I’ve seen so far suggests that this would not be what one would consider to be a pot of gold,” said
Lawmakers in
The expected stampede of states seeking to legalize it has parallels to the growing trend toward legalizing recreational marijuana, which 10 states have done and others are considering.
As with marijuana, lawmakers say they are motivated in large part because sports betting has been a black market activity outside
“I keep telling them this is not like a craps table or a slot machine,” said Mark Sickles, a Democratic state lawmaker in
Revenue from legalized pot makes up just a small portion of state revenue, even in the states with the most mature markets — about 2 percent in
The state’s gambling industry took in $928 million worth of sports bets since the first one was taken on through the end of November. From that, the state received less than $8 million in tax revenue.
Even if the state meets its projection of $25 million in sports betting tax revenue for a full year, that would amount to well under one 10th of 1 percent of the state’s $37.4 billion budget.
Former
“It wasn’t intended to do that,” he said. “I was driven by the fact that the
Lesniak expects sports betting to eventually generate over $100 million in taxes for the state once all
Yet experts say sports betting revenue in
For perspective,
The states that have launched sports betting this year expect they will bring in tax revenue that ranges from about $5 million in
Even Rhode Island, which has the highest sports betting tax rate at 51 percent, estimates it will take in $23.5 million a year, or a quarter of 1 percent of the state’s budget.
Those revenue projections are in line with expectations from the municipal ratings firm Moody’s Investor Service. Baye Larsen, who analyzes state finances at Moody’s, expects sports betting to account for a “very, very small slice” of state revenue and will do little if anything to help cover their rising pension, Medicaid, education or infrastructure needs.
Instead, some lawmakers said they will try to direct the money to specific projects. A bill in
“Legalized sports gambling is not a way to raise revenue for the government; it is not a mechanism to create jobs,” said
Associated Press writer Regina Garcia Cano in
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