The state seeks profit from sports betting

Thirty-three states and the District of Columbia now offer at least some form of sports betting — each vying for a stake in the multibillion-dollar enterprise that has grown rapidly since the U.S. Supreme Court allowed it nearly five years ago.

And states with mobile betting like Arkansas appear to be making more money than those that only allow in-person sports betting.

Arkansas figures show nearly $3 million was wagered on this year’s Super Bowl — more than triple the annual amount before mobile betting was allowed. Now state officials expect residents of neighboring states to cross into Arkansas to bet on March Madness.

“We’d be surprised if March didn’t set a new monthly record for sports betting in the state,” said Scott Hardin, spokesman for the Arkansas Department of Finance and Administration.

Arkansas, a much smaller state with no major league sports teams, started in-person sports betting in casinos in July 2019. But things really took off last year when the state allowed mobile sports betting.

Ohio also thrived when it launched mobile sports betting in January. In its first month, Ohio gamblers wagered more than $1.1 billion, generating more than $20 million in state tax revenue. That nearly tripled the revenue that legislative analysts had predicted for the entire first six months of operation.

But no one blames them for missing the mark.

“They had no way of knowing how big of a market we were going to have on day one,” said Jessica Franks, director of communications for the Ohio Casino Control Commission.

While some states, such as New York, started with limited in-person sports betting and gradually added mobile apps, Ohio started more aggressively — simultaneously launching multiple mobile options and retail locations. Republican Gov. Mike DeWine is now proposing doubling the tax rate on sports betting.

New York began allowing sports betting in 2019, but only in person at four upstate casinos, limiting the market. Like other states, betting boomed when the state began allowing gamblers to place sports bets via mobile phones and computers in January 2022. In the first month, more than $1.6 billion was wagered through online sports betting, compared to just $15 million through personal sports betting in casinos.

New York levies a 51 percent tax on mobile sports betting revenue — a much higher rate than other states — with most of the revenue going to education. Budget officials originally projected that mobile sports betting would generate $357 million in state tax revenue for fiscal year 2023, which ends March 31.

Punters have blown this one. Through February, mobile sports betting had generated $661 million in New York City education tax revenue.

State Sen. Joseph Adabo Jr., who championed sports betting as chairman of the Senate Racing, Gaming and Betting Committee, said even he was surprised by the results. “There’s certainly an appetite for sports betting with a mobile device,” Adabo said.

To be clear, New York and Ohio have large populations and numerous professional sports teams that help drive interest in sports betting. But smaller countries also beat expectations for sports betting revenue.

Indiana sports betting taxes topped $31 million in fiscal year 2022 — far more than the $12 million forecast when lawmakers authorized it in 2019. New Hampshire’s nearly $24 million in sports betting taxes easily doubled its original projection of fiscal year 2022.

Just like in the industry, however, there are many losers – although they still make good profits.

Legislative analysts in Montana, which only allows online sports betting in bars and casinos, expected $79 million in wagers last fiscal year, generating $4.8 million in state tax revenue. Actual results were about half that, $2.4 million in state tax revenue from about $45 million in sports betting.

And Connecticut received less than $20 million in sports betting taxes in the first 16 months after wagering began in October 2021. Legislative analysts projected $21 million in its first full fiscal year.

Nationally, legal sports betting has generated more than $3 billion in state and federal taxes since a 2018 Supreme Court ruling allowing it, according to the American Gambling Association. It produces about a quarter of the tax revenue ultimately expected from a fully mature market.

The sports betting debate has shifted from, “Should we consider this?” to, “How should we do this in a way that best serves our constituents?”’ said Casey Clark, the association’s senior vice president.

The prospects for sports betting expanding into more countries this year look mixed.

A bill legalizing sports betting passed the Kentucky House and passed the Senate on Wednesday, but it still faces a major hurdle. Similar bills have died in the Senate in the past, and this year’s version will need three-fifths of the vote to pass.

Proponents are also trying to push back on the sports betting bill in Minnesota and various other states.

In Missouri, efforts to allow sports betting stalled in the Senate over whether to combine it with regulations for slot machine-style games that appear in stores.

In Georgia, sports betting bills have stalled amid debate over whether a constitutional amendment is needed, how to spend potential tax revenue and whether to combine sports betting with legalizing casinos and horse racing tracks.

The three most populous states – California, Texas and Florida – currently have no online sports betting. The Seminole Tribe of Florida, which received exclusive state rights to conduct sports betting, shut down its online application in December 2021 after federal courts ruled it violated a rule requiring people to be physically present on tribal land when betting.

After the costliest ballot battle in US history, California voters last November rejected two competing sports betting initiatives backed by tribal nations and the gambling industry. Backers will likely try again, though it’s unclear when that might happen.

Information for this article was contributed by Jeff Amy, Tom Davis, Andrew DeMillo, Brendan Farrington, Susan Hay, Amy Beth Hanson, Steve Karnowski, Mason Hahn, Holly Ramer, Bruce Schreinerand and Julie Carr Smith of The Associated Press.

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