Which US States Earn the Most Taxes from Casinos and Sports Betting?

by Docsports.com - 8/1/2024

This study from Doc’s Sports examines the tax revenue collected from casinos and sports betting in various states and provides valuable insights into the economic impact of commercial casinos and sports betting across the country. The commercial casino and sports betting industries in the United States have experienced substantial growth in recent years, significantly contributing to state tax revenues.

Key Takeaways

Pennsylvania collected the highest tax revenue from casinos in 2023, totaling $2.3 billion, followed by New York and Nevada.
States like Nebraska and Virginia, which have recently approved commercial casino gaming, experienced substantial growth in tax revenue, with increases of 535% and 161%, respectively.
Sports betting also contributed significantly to tax revenue, with New York collecting over $2 billion, followed by Pennsylvania and New Jersey.

Tax Revenue from Casinos

Data from the American Gaming Association (AGA) provided valuable insights into the revenue generated by commercial casinos and the corresponding tax collections. In 2023, Pennsylvania collected the highest tax revenue from casinos, totaling $2.3 billion. This was followed by New York with $2.1 billion and Nevada with $1.2 billion. States that have recently approved land-based commercial casino gaming, such as Nebraska and Virginia, have seen a significant increase in tax revenue. In Nebraska, tax revenue grew by 535%, and in Virginia, it increased by 161% between 2022 and 2023.

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Tax revenue from sports betting

Sports betting is also a source of tax revenue, according to the data of Legal Sports Report. New York collects the most taxes with more than $2 billion, followed by Pennsylvania with $615 million and New Jersey ($541 million). In terms of sports betting handle, New Jersey comes on top with over $51 billion in bets, followed by New York ($45 billion) and Nevada ($41 billion).

The future growth of sports betting in newly legalized states isn't guaranteed, according to Raphael Esparza, a professional handicapper in sports betting. He notes, "Sports gambling will always happen, but 'grow' is a big word. Grow in new customers or grow in profits?" Esparza suggests that for continued growth, bookmakers need to innovate: "If books don't continue to expand the betting product with new ways, customers are just going to jump around to different books and look for the biggest 'bonus' plays." He believes that growth may depend on states legalizing a wider range of betting options, such as presidential odds or entertainment bets.

Spending in Casinos

Nebraska and Virginia recorded the highest growth in terms of customer spending in casinos in 2023, with increases of 535% and 98%, respectively. Nationwide, 2023 saw a growth of more than 10% in customer spending, totaling $66.7 billion, which represents $14.7 billion in taxes. This data indicates a growing interest in commercial casinos, especially in states where they have recently been approved.

In terms of the total amount spent by customers, Nevada remains on top with $15.5 billion. This means that almost one out of every four dollars is spent in a casino in Nevada. Pennsylvania comes second with $5.9 billion, followed closely by New Jersey with $5.8 billion.

Play smartly

For those participating in sports betting, Esparza offers some cautionary advice. "Parlay bets paid my salary working in the Vegas books, so that is my number one not to do," he warns. He also advises against betting on every game that's on TV, suggesting instead to "Play smartly and get the number you want. If that number is not there, then pass or watch 'live' betting numbers."

Looking ahead, the expansion of legalized sports betting across the U.S. appears to be slowing. Esparza points out, "2024 legislative season has ended. And NO state passed legislation." He suggests that Missouri might be the next state to legalize sports betting, but adds that residents of California, Texas, and Georgia may have a longer wait ahead.

The data highlights the significant role that commercial casinos and sports betting play in generating state governments' tax revenue. Pennsylvania, New York, and Nevada lead in total tax revenue from casinos. Additionally, sports betting has emerged as a major revenue source, with New York, Pennsylvania, and New Jersey leading in tax collections and betting handling. As more states consider legalizing commercial casinos and sports betting, the trend of increasing tax revenue and customer spending is likely to continue, benefiting state economies and providing valuable insights for policymakers.

However, as Esparza's comments suggest, the future of the industry may depend on innovation in betting products and careful navigation of legislative hurdles. States and betting operators will need to balance the potential for revenue growth with responsible gambling practices and evolving consumer preferences.

Methodology

This study utilizes data from the American Gaming Association (AGA) and Legal Sports Report to analyze tax revenue and growth in the commercial casino and sports betting industries. The AGA provides comprehensive data on casino operations, including tax revenue, customer spending, and year-over-year growth. Legal Sports Report offers detailed insights into sports betting tax revenue and betting handle. The data was collected and analyzed to identify trends and significant changes in the industry. The focus was on states with the highest tax revenue and those with notable growth due to recent approvals of commercial casino gaming and sports betting.

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Start:	December 21, 2024 @ 3:00 PM
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