New York helps US sports betting top $10B revenue, $1.5B taxes post-PASPA

The tally includes all publicly reported sports betting numbers from the first full month after the end of PASPA in May 2018.

The more than $10 billion in sports betting revenue comes from $141.032 billion in reported handle. That is good for a 7.1% hold. Those revenues led to $1.511 billion paid out in taxes to regulated betting jurisdictions around the country. That suggests an effective total tax rate of 15.1%. The New York effect

These milestones would have taken a bit longer to hit had NY online sportsbooks not launched in January 2022.

The state does not allow operators to deduct promo costs from their revenue and operates at a 51% tax rate, the highest in the country.

Despite contributing just six months’ worth of results, New York’s online handle ($8.5 billion) and revenue ($607.2 million) both contributed 6.1% to the US totals, good for fifth overall in each category. Tax revenue of $309.7 million, however, contributed 20.6% of the total.

Remove New York mobile and it is a much different story with revenue at $9.4 billion and taxes at $1.2 billion.

Will effective US sports betting tax rate grow?

Whether US betting jurisdictions see more tax dollars flow in, on the whole, depends on two issues: tax rates in new states and whether existing states that allow promotional deductions will reconsider those policies.

Massachusetts sportsbooks could have a big impact on that issue. There is no guarantee a bill passes by the end of the month because of a few sticking points, one of which is the tax rate disparity between the bills.

The Senate wants to tax mobile sports betting at 35% and not allow promotional deductions. The House, meanwhile, wants a 15% tax on mobile with promotional deductions allowed. Meanwhile, states have already started to reconsider those deductions. Colorado became the first state to roll back the deductions, while Virginia tried but failed to establish a 12-month limit.

by Matthew Waters