In What States Is Sports Betting Legal – Nearly four years have passed since the U.S. Supreme Court ruling in Murphy v. National Collegiate Athletic Association allowed states to set their own laws regarding sports betting. Today, the majority of states – 33 states and the District of Columbia – have passed legislation legalizing gambling on sports. Three years ago, when the American Action Forum first looked into legalizing sports betting, just 11 states and D.C. had approved it.
Because states develop their own laws in the absence of federal standards, no two state sports betting regimes are the same. These differences provide an opportunity to review which models and individual elements of the rules work better than others. This analysis provides an update on state legalization and assesses what seems to be working and what isn’t.
In What States Is Sports Betting Legal
Since the May 2018 Supreme Court ruling, two-thirds of states and D.C. have legalized sports betting in some form. Currently, 30 states and DC have operating industries, while three more have legalized betting but have yet to begin operations. Many of the remaining states will either introduce legislation in 2022 or consider holding a referendum. The maps below show the status of each state as of April 2019.
Usa States With Legal Sports Betting
The primary attraction of sports betting for state governments is tax revenue. According to the Legal Sports Report’s revenue tracker, states have reaped more than $1 billion in taxes paid by sports books since June 2018. That revenue is sure to accelerate as more states legalize and others launch statewide mobile betting via smartphone apps. New York provides an example of the revenue that can be generated through mobile apps. In January 2022, the first month mobile betting was legal, the state generated $63 million in taxes (mobile betting began on January 8). From July 2019 to December 2021 (except April to August 2020 during the COVID-19 pandemic), when betting was limited to casinos (whose revenue is taxed at a much lower rate than mobile revenue), tax revenue was $4.2 million.
A striking feature of the map above is that the two most populous states, California and Texas, have not legalized sports betting. While New York’s recent gains may prompt these states to move toward legalization, they may want to see if the gains are sustained or outweighed by some of the potential risks of legalized betting, including increased gambling addiction and advertising oversaturation. Florida, the third most populous state, has yet to begin implementing a sports betting system because the courts have blocked it. If Florida is allowed to proceed and California and Texas decide to legalize sports betting, state tax revenue could increase significantly.
States can structure their legal betting industries in different ways, limiting betting to physical locations or allowing it statewide through mobile apps, running the industry through state lotteries (or contracted monopolies), or opening it up fully to competition, depending on how. Taxes must be paid. Likewise, no two state sports betting regulations are the same. Considerations related to these options are examined below.
The most important factor in how a state chooses to legalize sports betting is whether to limit it to physical locations or allow mobile betting. The latter option increases the handle amount or total dollar value of bets in a state. Using data from Legal Sports Report’s revenue tracker, the monthly handle per capita available for mobile betting is $44.25, while the comparable average for physical locations is $3.09. This difference has major implications for sportsbook revenue — the amount of money left over after winning a bet — from which taxes come. States with mobile betting have 42 cents of monthly tax revenue per capita, compared to eight cents in states where mobile betting does not.
Usa Online Sports Betting Legal States (updated, 2023)
The revenue implications demonstrate why 22 states allow (or permit) mobile betting, but there are valid reasons for limiting it to retail locations. Limiting availability makes placing bets more difficult, and states may view this as a practical way to prevent a significant increase in gambling addiction or to reduce the number of bettors who may incur debts.
For states that allow mobile betting, a second consideration is whether to allow one entity (a state lottery or contracted provider) a monopoly or to allow several sportsbooks to operate in a competitive market. Most states have opted for competitive markets, which have clear advantages for bettors. Competition forces operators to lower their odds – or lower the amount of money they have to bet in order to get a certain amount back (usually $100 at American Odds pricing) – giving bettors a better chance of winning the bet. Bet they have to win to break even. This leads to better performing apps and, often, account bonuses designed to entice new customers.
Although there are some tradeoffs, states also appear to benefit from competitive markets. Competitive markets lead to higher handles, which in turn lead to higher tax revenues. A downside is that the sportsbook’s ratio of earnings – the hold percentage – is lower because sportsbooks compete at their disparity prices and thus win less often. This amount will more than compensate if the handle is large enough. Essentially, states that choose competitive markets choose a broader base so that the volume of bets outweighs the revenue from a small cut of each wager.
Four jurisdictions — D.C., New Hampshire, Oregon and Rhode Island — have opted for a monopoly mobile betting model, meaning mobile betting is offered directly through their lottery provider or through a contract with a sportsbook operator. Reasons for choosing this option include guaranteed revenue from awarding a contract and less hassle associated with ad blitzes in competitive markets. However, for bettors, these monopolies are undoubtedly harmful. In the absence of competition, these operators can limit their chances of creating large holds, which directly leads to greater losses for bettors. Apps are also disabled. Oregon’s state-run app was so poor it has since contracted with a well-known sports book to take over, and D.C. ’s app had problems, highlighting the company’s temporary removal from all mobile devices by Apple. During the recent Super Bowl – the biggest sports betting day of each year – the developer failed to make the required update.
Potawatomi Ceo Says Online Sports Betting Is ‘inevitable Future’ In Wisconsin
An obvious risk of a monopoly approach is that bettors become disillusioned with heavy losses and poorly performing apps and stop playing or placing bets in nearby states with competitive markets.
Comparing tax structures between states is more complicated because there are many ways to design regimes. Some states, such as Delaware and Rhode Island, tax revenue at 50 percent. Others prefer lower rates. For example, Iowa and Nevada have rates of 6.75 percent. States like New York, Connecticut, and Louisiana have different rates depending on whether the bet is online or at a physical location. Pennsylvania has a 36 percent tax rate above the $10 million initial licensing fee. Arkansas taxes the first $150 million of income at 13 percent, and beyond that at 20 percent.
It is too early to know what type of tax structure will work best. New York’s recent revenue success due to mobile betting (taxing land-based income at 51 percent versus 10 percent) may gain the attention of other states, especially those with larger populations. It is not clear whether its success is sustainable or a result of the innovation of the mobile betting launch and related promotions. As it becomes clearer, it may offer a guide to the tax structures other states choose to adopt.
Based on the high rate of states legalizing sports betting, it seems likely that others will follow and learn from the successes and challenges of early adopters. While it is too early to determine whether there is a structure that works best in the three areas examined above, there appear to be clear benefits for bookmakers and states from allowing mobile betting in a competitive market. Bettors have a better chance of winning and can bet from anywhere – a clear advantage as the pandemic has proven. Under this regime, states end up with per capita income.
Sports Betting Statistics, Trends, & Predictions
Oregon and D.C. offer cautionary tales for establishing lottery monopolies in mobile betting. Both states have been plagued by complaints from users about the fairness and performance of their platforms, and have been criticized for enabling cronyism without opaque contractual processes.
One certainty is that federal legislation establishing standards for state betting regimes won’t happen anytime soon. Such legislation has been introduced in previous Congresses, but none has been offered in more than a year in the 117th
Today’s level of legal sports betting in the United States seemed unimaginable a decade ago. More states are likely to legalize the industry by 2022
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