Strained by the coronavirus pandemic, state coffers across the US are poised to receive some welcome relief from an unlikely source – the sports betting industry. After six months with few sporting events, betting rebounded in the third quarter, generating $352 million in revenue or 47% more than the same period last year, Bloomberg reports.
While other gaming categories were hit by the pandemic and their tax contributions to the state treasuries were smaller than usual, sports betting has been expanding and despite the drop in sporting activity in the first half of the year, marked a 27% increase year-on-year for the January-September period, cashing in a total of $678 million.
Things appear to be looking up for the industry as winter sports are about to kick off in a few weeks and give a boost to betting revenues. “Sports betting is having a great year, and there’s a lot of enthusiasm for it,” said Dave Forman, Senior Director of Research at the American Gaming Association, adding that despite the sports calendar being somewhat shuffled because of leagues changing schedules, the spike in revenue points to a “growing appetite for betting on sports”.
Profits are poised for continued growth as sports betting will be legal in a total of 26 states and the District of Columbia as of 2021 after a series of successful referendums or legislative efforts in states such as Virginia, Colorado, Texas and New Jersey among others.
New Jersey, Pennsylvania Among A-Listers in Revenue
Last month saw New Jersey, Pennsylvania and five other states mark their best months ever in terms of sports betting numbers and tax revenue. These milestones come at a welcome time for states as 35 of them are currently going through a decline in tax income, according to the Tax Policy Center. New Jersey is on track to set a new all-jurisdiction revenue record this year, beating Nevada’s $5.3 billion high score in 2019. Last month alone, the Garden State marked a total of $800 million in sports betting income resulting in a tax revenue of $7.4 million.
Patrick Eichner, Director of Communications for Australian-based sportsbook PointsBet, is optimistic that with states like New Jersey hitting record numbers, things are only going to go up for the sports betting industry. In addition to winter sports, the NBA is about to restart in a few weeks. Though basketball markets were hit by the COVID-induced restrictions earlier this year, tournaments will return with the March Madness expected to take place in 2021 and NCAA planning a single-location event in Indiana.
Empty Coffers Bring New-Found Respect for Sports Betting
Once scorned by politicians, colleges and members of the sport business world, the betting industry has been enjoying a rise in popularity lately as states have scrambled to fill their coffers after spending millions to mitigate the impact of the coronavirus pandemic on the economy. The NCAA, for example, now permits sponsorship for its colleges. Just two years ago it sued to keep sports betting illegal in a challenge overturned by the U.S. Supreme Court. The appetite for tax income helped push through legislation that will allow sports betting operations to launch in Maryland, Louisiana and South Dakota in 2021.
Last year, sports betting brought a total of $118 million in taxes across 14 states with rates varying between 2% and 51%. Eilers & Krejcik Gaming, a self-described boutique research firm, expects total tax revenue across the U.S. to reach $5 billion in 2023.