One of the main reasons that some US states are rushing to put in place laws that will regulate and tax sports betting is that they hope to bring in substantial income. However, Moody’s Investors Services have put a dampener on these expectations by stating that states will only get a minor revenue boost if they legalize sports betting.
According to an article by Reuters, relative to states’ total budgets, the size of any revenue increase they expect to see will be “puny”.
Moody’s says that 50 US states could collect up to $1.5 billion in taxes collectively should they legalize sports bets – including online gambling and at a tax rate of 8%. If one looks at these numbers, the $1.5 billion amount is 0.2% of their combined operating funds for 2017.
Moody’s summarized the situation as it currently stands in terms of individual states’ move to legalize sports betting, following the Supreme Court’s overturning of a 1992 law banning sports betting.
Mississippi, Rhode Island, West Virginia and Pennsylvania had enough foresight to prepare early for the Supreme Court’s decision and already have legislation lined up to introduce legal and regulated sports betting. As such, Moody’s points out that they are ahead of all other states.
Delaware is already planning to roll out full scale sports betting this week, given that it was one of a minute number of states that allowed limited sports betting before the Supreme Court’s ruling.
What New Jersey Plans to Do
Since this was New Jersey’s fight in the first place, all eyes are now on the Garden State to see what it plans to do. This week, a state legislative committee will weigh a bill that will charge an 8% tax on gross sports wagering revenues at racetracks and casinos. In addition, a 12.5% levy will be charged on online sports bets.
Moody’s predicts that sports betting taxation will generate what it calls a “a minimal lift” for the state’s revenues. However, it is also predicted that legalized sports betting “should help increase tourism and boost the city’s [Atlantic City’s] casino-dominated economy.”
“At the state level,” says the group, “New Jersey will experience only a minor bump in tax revenue from the legal wagering relative to its budget.”