The Current: No, Sports Betting Tax Revenue Isn't Missing Projections
Gambling news roundup: Underdog sues to protect fantasy sports in California; the 'Big Beautiful Bill' could change income tax for gambling.
The Current is a weekly report on developments in the gambling industry from The Closing Line.
Has state tax revenue from sports betting been a disappointment?
I saw this tweet from New York Times reporter Kenneth Vogel and decided to unpack it:
Since 2018, 39 states (+DC & PR) have legalized sports betting. But in many, tax $ hasn't met predictions, while public health costs are only starting to become apparent.
This is a sweeping statement on the tax front. But is it true? Data for states with actual projections for sports betting largely refutes the idea. More on that in a bit.
Here’s some context and background before I get into the data:
As I covered the rise of legal sports betting over the past decade, it’s been common to conflate handle — the amount wagered — with revenue. Hold was historically 5-7% of handle in Nevada and now is around 10% nationwide. I know this sounds like grade-school stuff to this audience from the comfort of 2025, but this confusion is often what led to some outsized expectations for sports betting.
This also seems silly today, but some people thought retail sportsbooks would perform as well as online sportsbooks.
Lobbying efforts may have been content not to push back on the handle vs. GGR narrative in order to get legislation to the finish line.
Lobbyists successfully persuaded legislators to allow sportsbooks to deduct promotional spend from taxable revenue in many states. Is that good or bad policy? There are decent arguments both ways. The deduction does help sportsbooks to spend more aggressively to acquire more customers, which can end up being good for tax revenue over a longer time horizon.
COVID had a drastic impact on sports betting. Some states launched right before or during it, and existing markets also took a hit. So we have to look at 2020 and later performance through that lens.
Tax revenue from sports betting in states that legalized it is “found” money; there aren’t many ways for states to generate new revenue without raising or creating taxes that would be unpopular. It’s not going to balance a state budget, but it’s also not nothing.
Would lower estimates of tax revenue have stopped the tidal wave of sports betting legalization? It might have made a difference in some states, but my guess is we would still have seen widespread adoption of legal sports betting. But as I am about to show you, a lot of projections were low, not high.
So what does the data tell us?
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First off, we have the top-level data. From states that report tax data from sports betting, we’re just shy of $9 billion in tax revenue since the fall of the federal ban. About a third of that comes from New York, with an aggressive tax rate of 51%.
Is that a lot of money? Yes. Is the amount perhaps disappointing on a state-by-basis? In reality, not really.
North Carolina sports betting and taxes
We have one great data point from the most recent state to legalize sports betting: North Carolina.
The first full year of data after NC’s launch is in; the state says that it collected $131 million in revenue in Year 1.
What was the actual performance versus estimates?
A legislative fiscal note in the state projected well less than $50 million in Y1 and only $73 million several years into legal sports betting.
Another estimate said it would take several years until we hit $100 million in tax revenue.
So in NC, not only were estimates hit, but they were far exceeded. But that’s just one state; what else is there?
The 2017 Oxford study
In 2017 — before the Supreme Court struck down the Professional and Amateur Sports Protection Act — Oxford Economics put out a study commissioned by the American Gaming Association. The study was sometimes a reference and cited in the wave of legalization of the past decade, but was not the baseline used in every state. If you want to take a look, here it is:
The study approaches what legal sports betting would look like in all states based on several different scenarios and tax rates.
Take New Jersey — one of the earliest and biggest markets in the US — from Oxford:
At a 10% tax rate, Oxford predicted handle of $9.6 billion, and GGR of $622 million. It predicted handle of $7.9 billion and GGR of $560 million in a higher tax rate scenario (15%).
The study forecast $62 million to $84 million in taxes, depending on the scenario.
What actually happened? Last year, New Jersey handle clocked in at $12.8 billion, and GGR of $1 billion. Tax revenue was reported at $141 million.
The bottom line: If this study had guided expectations for legal sports betting, no one would be disappointed.
Other states and tax revenue
The Associated Press wrote about the performance of tax revenue back in 2019. Some of this helped set the narrative that sports betting was underperforming.
The story notes that New Jersey and Delaware did meet initial projections.
Projections in West Virginia were high initially; but since publication, projections are being met.
Some of the other states with projections that were not being met had underlying problems:
Pennsylvania launched retail sports betting first, and online sportsbooks launched on a staggered basis over the course of 2019. When the AP wrote that story, online sports betting hadn’t even started. I think it’s safe to say that PA sports betting is now meeting or exceeding expectations. We also know from experience that a single launch date for online sports betting is way better for industry performance than what PA did.
Mississippi had retail sportsbooks only. Projections were certainly too high sans online sports betting.
Rhode Island sports betting is a monopoly with a terrible app/site; any underperformance should surprise no one.
A fiscal note in Arizona forecast $34 million in revenue by Fiscal Year 2024. In reality, tax revenue had hit almost $70 million before calendar year 2024 even started.
When Ohio originally legalized sports betting, a fiscal note projected between $7 million and $24 million in tax revenue. What actually happened? The high-end projection was surpassed after just two months at the start of 2023. Ohio saw more than $50 million in tax revenue for the first six months after launch. That was at the original tax rate of 10%, which was increased to 20% before the first year of legal sports betting was even complete.
Tennessee legalized sports betting after the initial wave, in 2020. It actually used the Oxford study as a baseline and ended up underprojecting tax revenue. Lawmakers expected $20 million in new tax revenue in Y1 and $40 million in Y2. Actual tax revenue easily surpassed both figures.
Colorado was another fairly early adopter. Tax revenue was projected to be $16 million annually in a fiscal note. The first year was COVID, so it’s hard to do much with data. By 2022, tax revenue was almost $20 million for the full year.
Indiana launched sports betting in 2019. A report prepared by Eilers & Krejcik for the state projected $87 million in tax revenue over the first five years. Again, the launch was about six months before COVID. But by 2022, the sports betting industry was humming. For 2022-2024 (three years), tax revenue eclipsed $120 million, beating the five-year estimate on its own.
Kentucky is another newer state with sports betting. Initial projections on Y1 tax revenue were $23 million; actual revenue was $37 million.
So while tax revenue estimates might have been inflated or misunderstood early on, some of that was based on problems within the markets and casual expectations not based on any research or projection. Some of it came from some conflation of handle and taxable revenue.
As sports betting matured and we had actual data about how the US market would work, policymakers had a better sense of expectations. We actually saw overperformance of tax revenue projections.
Has sports betting tax revenue underperformed predictions? As of 2025, there’s little evidence to support that claim. In fact, one could argue that tax revenue projections were sandbagged.
Now, if you want to argue that sports betting taxes aren’t high enough and the industry should be generating more revenue for states, that’s a more defensible position. But that’s an entirely different argument than saying “sports betting tax revenue isn’t meeting expectations.”
Gambling news roundup
Suit: Beasley, subject of betting probe, had financial issues (ESPN): “Malik Beasley, an NBA player under investigation in a federal gambling probe, had ‘financial issues’ and struggled to pay back a $650,000 advance this year, according to a lawsuit filed by his former marketing agency. The suit, filed in April by New York-based Hazan Sports Management Group, seeks $2.25 million in damages and legal fees from Beasley for breach of contract. An attorney for Hazan Sports wrote that the firm ‘elected to take a chance and make a substantial investment of time, effort, and resources in a player with known issues (including and especially financial issues)’ when it took Beasley on as a client in November 2023.”
Underdog Sues California Attorney General Ahead Of Looming Fantasy Sports Opinion (The Closing Line): “The fight over the future of daily fantasy sports in California is heading to court — even before the state’s attorney general releases an opinion expected to declare DFS illegal. Fantasy sports operator Underdog Sports is asking the Sacramento Superior Court to stop California Attorney General Rob Bonta from releasing the opinion, which the AG’s office has intimated will drop this week. That opinion will certainly affect daily fantasy sports operators and could also impact other fantasy operators and contests involving real-money transactions.”
My latest on my prediction markets newsletter, The Event Horizon:
Gambling Taxes Could Exceed Your Net Winnings Under Sweeping Federal Bill (InGame): “Bettors could be forced to pay more in taxes than they make in net winnings, under the new sweeping federal bill passed by the Senate on Tuesday. The 940-page Senate version of the ‘One Big Beautiful Bill Act’ — the legislation backed by President Donald Trump that includes a number of major tax and spending changes — includes several differences from the version of the bill that was passed by the House in May. Among them is a new provision to limit deductions for wagering losses to 90% of annual winnings.”
Apollo Funds Complete Acquisitions of International Game Technology's Gaming & Digital Business and Everi; Combined Enterprise to Operate as IGT (press release): “Apollo today announced the completion of the previously announced acquisitions of International Game Technology PLC’s (doing business as “Brightstar Lottery”) Gaming & Digital Business and Everi Holdings Inc. ("Everi") by a holding company owned by funds managed by Apollo affiliates. The all-cash transaction, valued at approximately $6.3 billion, brings together complementary businesses to form a privately held global leader in gaming, digital and financial technology solutions. The two companies will be integrated into a combined enterprise in the coming months. Headquartered in Las Vegas, the combined enterprise will operate under the IGT name, while retaining the Everi brand in select markets and product lines. IGT will be organized into three business units: Gaming, Digital and FinTech, creating a customer-first enterprise supported by a people-first culture that values talent, collaboration and innovation.”
“This is a defining moment for our industry,” said Nick Khin, Interim CEO of IGT. “By uniting two leading organizations, we are building an enterprise with the scale, talent and technology to lead the future of gaming. With Apollo’s support, we are very well-positioned to deliver exceptional content across land-based and digital experiences, along with integrated financial solutions and casino management that enhance the player journey and drive value for our customers. I’m honored to be part of this exciting chapter and to help shape the future of IGT.”
Intralot S.A. to Acquire Bally’s International Interactive Business in a Transaction that Creates a Global Gaming Technology and Services Company in Lottery and Digital Online Gaming Markets (press release): – “Intralot S.A. and Bally’s Corporation today announced that their respective Boards of Directors approved their entry into a definitive transaction agreement pursuant to which Intralot will acquire Bally’s International Interactive business (the “International Interactive Business”) in a cash-and-shares transaction that values the International Interactive Business at an enterprise value of €2.7 billion (the “Transaction”). The consideration for the acquisition of the International Interactive Business will comprise a combination of cash paid by Intralot and newly issued shares delivered by Intralot to Bally’s, as more specifically detailed below. As part of the Transaction, Intralot expects to refinance part of its existing debt facilities and Bally’s also expects to repay secured debt from the cash proceeds.
Sokratis Kokkalis, Intralot’s founder and the current Chairman, commented: “The transaction we announced today marks a doubly important day: On the one hand, for Intralot, which is growing with the acquisition of the online division of Bally’s International Interactive, creating a company with significant multiples in operating profits and unlimited space to expand into online gaming. On the other hand, for Greece and the Greek stock exchange, where a strong large-cap company is being created with the prospect of attracting significant foreign capital, helping to establish the country as a reliable investment destination.
ClubWPT Gold and WSOP honor paydays but not the bracelet (SBC Americas): “The controversy surrounding the World Series of Poker (WSOP) Millionaire Maker event is largely complete, as both the WSOP and sweepstakes operator ClubWPT Gold have announce their decisions regarding poker pro Jesse Yaginuma’s win last week. The WSOP announced it was investigating heads-up play between Yaginuma and runner-up James Carroll after questions arose regarding collusion. Yaginuma was part of a promotion from sweepstakes poker site ClubWPT Gold that awarded an additional $1 million if he managed to win the event. Though he began at a significant chip disadvantage, his aggressive play and lots of folding by Carroll led to him winning the event. On Monday, the WSOP announced it will pay both players, but it will withhold the bracelet. Yaginuma has previously won three online WSOP bracelet events, but this was his first live bracelet victory.”
Missouri Sports Betting Public Comment Period Open (Legal Sports Report): “The process to launch Missouri sports betting is in the midst of its next major step. The Missouri Gaming Commission published its rules for MO sports betting last month. Now, interested parties must submit comments by July 16.
The commission will hold a public hearing July 17.”
Minnesota Wild, Frost facility now named Grand Casino Arena (ESPN): “The operators of Xcel Energy Center, home of the NHL's Minnesota Wild and PWHL's Minnesota Frost, announced a name change for the facility on Monday. The 18,000-seat arena in downtown Saint Paul will be known as Grand Casino Arena starting on Sept. 3. Minnesota Sports & Entertainment signed a 14-year naming rights partnership with the Mille Lacs Band of Ojibwe, owners of the building.”
"Grand Casino Arena will serve as the anchor of a dynamic entertainment district that transforms downtown Saint Paul," said Craig Leipold, majority owner and principal investor in Minnesota Sports & Entertainment. "The Mille Lacs Band of Ojibwe has been a strong supporter of and investor in this city. We are thrilled for their partnership and support of the arena."
Tossed beer, Venmo requests, death threats: The fan/athlete relationship in the sports betting era (Boston Herald): “Having pitched in the majors from 2005-17, including five seasons in Boston, Red Sox chief baseball officer Craig Breslow can relate to many of his players’ experiences, but online harassment isn’t one of them. ‘Horrific is the word that comes to mind,’ he said of the messages the Whitlocks received. ‘I played but I think – Twitter was just becoming mainstream, and I was probably unaware enough to not really be super-active,’ said Breslow. ‘But it’s scary, these platforms for people to anonymously say these just like, awful things. You feel for the human side of all of these players. It’s really easy, when they put on a uniform and they can do these things on a field that most people can’t, to lose sight of the fact that they’re still just fathers and husbands who are going home to families with kids. And they’re people, at the end of the day.’”
Social Gaming Leadership Alliance Urges NJ Governor to Veto Flawed Online Social Gaming Ban (press release): “Following final passage of A5447 and S4282 by the New Jersey Legislature, Social Gaming Leadership Alliance (SGLA) is urging Governor Phil Murphy to veto the bills, which would effectively ban legitimate, free-to-play online social games that operate under long-established promotional sweepstakes frameworks.”
“These bills may have passed the Legislature, but they’re the wrong solution to a misunderstood issue,” said Jeff Duncan, SGLA Executive Director and former Congressman. “We urge Governor Murphy to veto A5447 and S4282 and convene a real conversation about consumer protection, innovation, and economic opportunity.”
Lotto.com Announces Full Suite of Lottery Draw Games Now Available in Maine (press release): “Lotto.com, the nation's first lottery platform to digitally deliver official state lottery draw games, is proud to announce all draw offerings of the Maine Lottery are now available on Lotto.com.”
“Expanding into Maine, home to one of the country’s earliest state lotteries, is an exciting milestone for our team,” said Thomas Metzger, CEO of Lotto.com Inc. “We look forward to bringing new players and incremental sales to the Maine Lottery and continuing to grow our incredible community of over three million customers!”
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