Posted on: May 14, 2022, 12:28h.
Last updated on: May 13, 2022, 06:30h.
The American Gaming Association (AGA) recently released its annual “State of the States” report.
The in-depth report, which provides a comprehensive overview of the US commercial casino industry, revealed that gaming has more than recovered from the COVID-19 pandemic. It also showed that for states seeking to substantially generate new tax streams through gaming expansion, iGaming easily tops sports betting.
As of December 31, 2021, 30 states, plus DC, had some form of legal sports betting. Only six states permitted online casinos with interactive slot machines and table games.
While mobile sports betting had five times the number of legal jurisdictions compared with the number of iGaming states, online casinos generated 86% of the amount of gross revenue that oddsmakers did.
The 31 sport betting markets reported gross gaming revenue (GGR) of $4.33 billion. The six iGaming states tallied online GGR of $3.71 billion.
Considering iGaming is only legal in six states, and sports betting is legal in 30+ states, it signifies how profitable the iGaming market is, or can be (especially compared to sports betting),” Atlantic City-based gaming attorney C.J. Fisher, who co-chairs law firm Fox Rothschild’s Gaming Practice Group, told Casino.org.
“In short, the comparison is compelling, and I think it supports further expansion of iGaming in the US,” Fisher added.
Though life began to return to some sense of normal in 2021 and land-based casinos were largely open for business, iGaming revenue continued to flourish. GGR from regulated online casinos grew 139% from $1.55 billion in 2020.
iGaming Tax Benefit
Not only does iGaming generate more gross revenue than sports betting, but states typically tax online casino revenue higher than sports betting.
New Jersey, for instance, is one of the few states where both iGaming and sports betting (retail and mobile) are legal. The state levies an effective tax rate of 9.75% on brick-and-mortar sports betting GGR, and 14.25% on mobile. iGaming platforms are required to share 15% of their gross revenue with the state.
In 2021, New Jersey online casinos generated more than $205.2 million in tax revenue. Sportsbooks, both retail and online, delivered the state less than half of that at $102.6 million.
Pennsylvania, another state where online casinos and sports betting are legal, reported iGaming GGR of $1.11 billion in 2021. Sportsbooks kept $340.1 million of players’ bets.
Pennsylvania taxes internet slot machines at 54% and interactive table game revenue at 16%. The state also levies one of the highest sports betting taxes, but at 36% it’s still substantially lower than online slots — which account for the lion’s share of the iGaming revenue.
iGaming proves to be a substantial tax generator for states seeking new revenue. But the many states that only allow traditional casino gambling fared just fine last year, as pent-up demand fueled record play across the nation.
The AGA reported in its “State of the States” that GGR from land-based casinos, video gaming terminals, iGaming, sports betting, and daily fantasy sports totaled a record $53.03 billion in 2021. The new ceiling easily bested the US commercial gaming industry’s previous all-time mark of $43.65 billion set in 2019.
AGA President and CEO Bill Miller sees the industry only further growing.
“Although 2021 was a tumultuous year, I’m confident it set a new baseline for gaming in the long-term as we provide consumers with cutting-edge entertainment and anticipate the full recovery of travel, events, and entertainment,” Miller concluded.