While state taxes on sports betting have increased steadily since the expansion outside of Nevada in June 2018, the groundbreaking milestone of surpassing $5 billion has only come to pass after nearly half a decade. As much as 40%, or $2.15 billion, of this money flux was collected in a single year, 2023, which broke the previous records in terms of the volume of funds the sportsbook operators generated.
Last year, its gross sports betting revenue, the effective rate of return, or holding, reached an all-time high of 9.1%, which is above the norm of 7%. The result compares favorably to last year’s increase. The rise of $643.4 million in tax revenue figures for 2023 compared to 2022 is in regard to the entrance of five new states in the market and the increase in the tax rate, with four states taking 14% or more of sports betting revenues from apps.
In the history of tax income collected from wagering in the state in January, there was an all-time high monthly revenue of $271.8 million. There was evidence of this already after just two months of 2024, and it was carried on by the state tax payment, which exceeded $400 million.
Governor Andrew Cuomo’s projection of $500 million in revenue from mobile sports betting will almost definitely come true. That figure used to sound like a pipe dream, but recent developments give reason to believe it could very well become a reality. Over the last two years, New York’s nine digital providers have donated a total of $1.73 billion to the state education budget, including taxes. This high figure represents the tax contributions of the top market players FanDuel and DraftKings to the overall tax revenue of all states.
In 2023, the collection of mobile tax increased in New York, reaching 24.3% due to a rise in the hold rate and an 18 percent increase in the handle against the total of $19.1 billion. Compared with Pennsylvania, which has a 34% state tax along with this deduction, and New Jersey and Illinois, which are thinking of tax rate increases, we can see how fast the tax framework for sports betting is changing.
The concentration on parlay and same-game parlay has led to the retention of a nationwide 9.1% hold in 2023, as players show an increasing trend in placing multi-leg bets with the possibility of getting more considerable thrills. Sports betting sites in New Jersey and Illinois, the two states bringing in a lot of revenue from parlay wagering, prove the power of this wager type.
Ohio’s inclusion in the top ten list of all-time powerhouses in the sports betting world market demonstrates that the power market sports betting exercise works, and Massachusetts is also advancing. Tennessee’s innovation of taxing based on a percentage of the handle rather than adjusted gross revenue (AGR) indicates that sports betting taxes are shifting to a different path.
The initial two years of state tax revenues generated from sports betting provide the gambling industry with considerable optimism regarding the future and potentially lead to the imposition of even higher tax rates in New Jersey and Illinois, which will ultimately contribute to the development of state budgets. An 18% gross revenue levy is being implemented in North Carolina, and the forthcoming sports wagering model expands the sources of tax revenue that can be deposited into state coffers. State economies rely significantly on sports wagering, and as a result, state strategies to profit from this lucrative market are rapidly emerging.
