Legalizing online sports betting in Nebraska could generate $87M over 5 years, report says

Assuming that 70% of generated revenues would be distributed as property tax credits, the same as for voter-approved casino gambling, this could translate into roughly $61 million in additional tax relief over the same period, independent research firm Eilers & Krejcik Gaming found.

Tax Relief Nebraska is currently petitioning to put the option of legalizing online sports betting on the ballot in 2026. Jordan McGrain, a petition sponsor, said the effort is ahead of schedule in its signature gathering.

McGrain said the group commissioned the report because they felt it was important to demonstrate what legalizing online sports betting could mean for property tax relief, a top issue for Nebraska voters in recent years. He said the report shows the benefits the measure could have in stabilizing the state budget, as officials grapple with an ongoing structural deficit.

State Sen. Brad von Gillern of the Elkhorn area, chair of the state Legislature’s Revenue Committee and a known opponent to online sports betting efforts, said the predicted revenue impact of the initiative would not move the needle enough on the deficit or property tax relief to change his view. He noted that breaking down the projected revenues by year would translate to roughly 1% of the state’s current property tax program.

“If people are voting for the online gambling initiative believing that it’s going to substantially change their property tax bill, they’re going to be sadly disappointed,” von Gillern said.

Legalizing online sports betting has been a topic of debate in Nebraska for the past several years, with multiple attempts to do so in the Legislature failing to garner enough support to pass. Critics have long argued that the possible revenue benefits do not outweigh the social costs of the state effectively encouraging gambling.

State Sen. Stanley Clouse of Kearney introduced the latest legislative attempt at legalizing online sports betting in a bipartisan partnership with State Sen. Eliot Bostar of Lincoln, with Bostar bringing a constitutional amendment to put the question to the voters while Clouse brought a bill aimed at regulating the change.

Clouse said while he is no proponent of gambling, he recognizes that gambling is happening in Nebraska regardless. McGrain echoed this point, noting that all of Nebraska’s neighboring states — save for South Dakota — have already legalized online sports betting and argued the initiative is an attempt to claw back some of the revenue the state is losing.

Clouse’s bill, Legislative Bill 421, had an estimated revenue impact of roughly $70 million over four years, according to its fiscal note. Clouse said part of the benefit to his and Bostar’s proposal is that it would have offered the state control over how online sports betting was taxed and potentially come with higher yearly revenues.

Clouse and other LB 421 supporters at the time predicted that if the Legislature did not pass the bill, there was enough public support for an independent ballot initiative, which state lawmakers would have less control of regulating.

“Now, we will live with what the voters decide,” Clouse said.

Von Gillern said though he’s opposed to the policy, he would do “whatever it takes” to implement the policy if voters pass the ballot initiative.

Clouse said one vital component that he would like to see in any initiative to legalize online sports betting is that it allocates a portion of the revenue to the state’s Compulsive Gambling Fund, which seeks to help Nebraskans struggling with gambling addiction. McGrain said 2.5% of sports gambling revenues would go to the fund — the same as casino gambling.

Clouse said he agreed with von Gillern’s point that legalizing online sports betting likely would not make much of a difference in the state’s budget issues or property tax relief efforts but argued it would at least have the benefit of broadening the state’s tax base.

McGrain said as state lawmakers have debated ways to fix Nebraska’s budget issues, he feels there has been too little talk about possible revenue generators, in favor of focusing on budget cuts and expanding sales taxes. Regardless of how small the potential revenue impact is, McGrain argued it’s a step in the right direction.

“We have to find the revenue somewhere,” McGrain said.

Von Gillern said the state budget is fast approaching a ceiling in what it can offer in property tax credits, with the current program making up about 20% of state expenses. However, he said he would rather shift the focus onto offsetting local levies, rather than looking for new revenue sources.