A recent, widely circulated Associated Press (AP) article, entitled “Sports betting will be no home run for state budgets”, takes a negative tone in reviewing the results (so far) of sports betting in states that have recently legalized it, largely focusing on New Jersey.
It’s surprising because there is nothing negative about the results out of New Jersey since legal sports betting began there in June. Here’s a reality check…
1) The AP piece itself included numbers showing that New Jersey is on track to match or exceed the state’s revenue estimate of $25 million over one year. The state took in around $8 million through November from sports betting. Actually meeting a government revenue projection? That is a small miracle in itself.
2) To gloss over this reality, the article highlights that sports betting revenues make up a small percentage of total state budgets. Meanwhile, nobody in their right mind argued sports betting revenue would patch state budgets – especially not for big-spending states like New Jersey.
3) New Jersey sports betting is doing more than meeting projected revenue, but that perspective is missing from the AP piece. Moody’s projected that sports betting would account for 4 percent of gaming revenue, but so far it has already accounted for 8.5 percent.
4) Sports betting seems to be boosting New Jersey gaming industry revenues, which saw a 19.5 percent increase in September this year, compared to September 2017. Government took in $23 million on gaming in September alone.
5) Pennsylvania is referenced as potentially eating into New Jersey’s industry. But Pennsylvania’s tax rate on bets is a whopping 34 percent, plus the state imposes a big licensing fee. This has delayed the rollout of sports betting in Pennsylvania. Jersey’s tax rate could be better, but their Western neighbor is going to have trouble competing.
6) While legalizing sports betting the right way (with low tax rates and no fees) is good for a state economy, consumers, and yes, government coffers, these aren’t the only reasons to do it. Bringing the existing black market into the light, creating transparency for betting, and regulating a currently illegal market are also good reasons for legal sports betting.
7) New Jersey also legalized sports betting to help localities, specifically downtrodden Atlantic City – though the state has a long way to go to reduce the tax burdens, waste, and overregulation that also contribute to their economic woes.
With the right legal framework, no fees for giveaways to sports leagues, and low tax rates, the ceiling for sports betting in the digital age is sky-high. Don’t let straw man arguments distract from the reality.