Sports betting is now legal in 38 states plus the District of Columbia, with states raking in $9.3 billion in tax revenue since the Supreme Court ruled in 2018 that states could legalize sports betting.
Sports betting companies now handle nearly $150 billion in wagers annually, according to SportsHandle.com, and Americans projecting to bet a record $30 billion in the NFL season, according to the American Gaming Association. In response, some states are have added or are considering new taxes on sports betting revenue.
In June, Illinois imposed a per bet tax, 25-cents on the first 20 million bets and a 50-cents on wagers after that. In response, FanDuel responded with a 50-cent surcharge on all wagers and DraftKings (DKNG -1.73%) has signaled it may follow suit. Analysts suggest the new tax could eat into earnings for sports betting companies, but if the Illinois tax proves successful in adding to its coffers other states may follow suit with their own. Similar taxes are under consideration in New Jersey, Maryland, Massachusetts, Michigan, and Pennsylvania.
Read on for a breakdown of sports betting tax revenue by state and where gamblers are wagering the most.
Sports betting tax revenue by state
New York has accumulated the most tax revenue from sports betting, some $3.3 billion since June 2019.
Sportsbooks have also generated the most revenue from gamblers in New York, $6.4 billion since legalization.
New Jersey has the largest disparity between sportsbook revenue and state tax revenue. The Garden State has collected just $657 million off of $5.1 billion in gross sportsbook revenue since June 2018, when sports betting was legalized.
South Dakota has generated the least revenue from sports gambling, just $304,218. That’s because sports betting can only occur at seven casinos in the state, those in Deadwood and at tribal casinos, significantly limiting opportunities to gamble.
Is it better to bet on sports, invest, or save?
Based on the numbers during football season, the average NFL bettor losses between 8% to 9% of what they wager. That translates to a $133 to $209 loss per bettor depending on the year. Even with big games and high stakes, sportsbooks consistently come out ahead and most individual bettors finish with less than they put in.
By comparison, putting that same money into a high-yield savings account or the stock market would have delivered steady gains. High-yield savings accounts offer modest but safe and predictable returns of between 0.4% and 2.7% over the NFL season, depending on the year while the S&P 500 delivered anywhere from 1% to 12% gains, again depending on the year.
NFL season | Average Bettor Return | Average Bettor Dollar Return | HYSA Return | S&P 500 Return |
|---|---|---|---|---|
2024 Season | -8% | -$209 | 2.7% | 6% |
2023 Season | -9% | -$186 | 2.5% | 12% |
2022 Season | -9% | -$133 | 0.4% | 1% |
If you’re looking to invest in the industry, The Motley Fool has seven ideas to get you started investing in sports betting stocks. With sports betting legal in more than half the states in the U.S., it’s an industry many are willing to wager on.
About the Author
Jack Caporal has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.