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State looks for sports-bet payoff

Mobile wagering expected to draw neighboring gamblers by DAVID LIEB The Associated Press | March 17, 2023 at 1:54 a.m.
A man checks the odds on a sports betting terminal at the Ocean Casino Resort in Atlantic City, N.J., in February. (AP)

Thirty-three states and the District of Columbia now offer at least some form of sports wagering -- each scrambling for shares of the multibillion-dollar enterprise that has rapidly expanded after the U.S. Supreme Court allowed it nearly five years ago.

And states with mobile betting like Arkansas appear to bank bigger bucks than those that allow only in-person sports wagers.

Arkansas figures show nearly $3 million was wagered on this year's Super Bowl -- more than three times the annual amount before mobile betting was allowed. Now state officials expect residents of neighboring states to cross into Arkansas to bet on March Madness.

"We will be surprised if March doesn't set a new monthly record for sports betting in the state," said Scott Hardin, spokesperson for the Arkansas Department of Finance and Administration.

Arkansas, a much smaller state without major league sports teams, began in-person sports betting at casinos in July 2019. But things really took off last year when the state allowed mobile sports betting.

Ohio also boomed when it launched mobile sports betting in January. In its first month, Ohio bettors wagered more than $1.1 billion, generating more than $20 million in state tax revenue. That nearly tripled the revenue that legislative analysts had projected for the entire first six months of operation.

But no one's blaming them for missing the mark.

"They couldn't know how big of a market we were going to have on day one," said Jessica Franks, communications director at the Ohio Casino Control Commission.

Whereas some states such as New York started with limited in-person sports betting and gradually added mobile apps, Ohio began more aggressively -- simultaneously launching numerous mobile options and retail locations. Republican Gov. Mike DeWine is now proposing to double the tax rate on sports betting.

New York began allowing sports betting in 2019, but only in-person at four upstate casinos, limiting the market. Like other states, betting boomed when the state began allowing gamblers to make sports bets through cellphones and computers in January 2022. In the first month, more than $1.6 billion was wagered through online sports betting, compared with just $15 million through in-person sports bets at casinos.

New York charges a 51% tax on revenue from mobile sports betting -- a far higher rate than other states -- with most revenue going to education. Budget officials originally projected that mobile sports betting would generate $357 million in state tax revenue for the 2023 fiscal year, which ends March 31.

Bettors have blown that away. Through February, mobile sports betting had generated $661 million of tax revenue for education in New York.

State Sen. Joseph Addabbo Jr., who advocated for sports betting as chair of the Senate Racing, Gaming and Wagering Committee, said even he is amazed at the results. "There is an appetite, certainly, to do sports betting with a mobile device," Addabbo said.

To be clear, New York and Ohio have large populations and multiple professional sports teams to help drive interest in sports betting. But smaller states also have exceeded expectations for sports betting revenues.

Indiana's sports wagering taxes topped $31 million in the 2022 fiscal year -- well more than the $12 million projection when lawmakers authorized it in 2019. New Hampshire's tax take of nearly $24 million from sports betting easily doubled its original projection for the 2022 fiscal year.

Just like in the industry, however, there are plenty of losers -- albeit they're still earning nice hauls.

Legislative analysts in Montana, which allows sports bets only from online networks inside bars and casinos, had anticipated that $79 million worth of bets would be cast last fiscal year, generating $4.8 million of state tax revenue. The actual results were about half that -- $2.4 million of state tax revenue from about $45 million of sports bets.

And Connecticut received less than $20 million in sports betting taxes in the first 16 months after wagering began in October 2021. Legislative analysts had projected $21 million in its first full fiscal year.

Nationwide, legal sports betting has generated more than $3 billion in state and federal taxes since the 2018 Supreme Court ruling allowing it, according to the American Gaming Association. It's producing about one-quarter of the tax revenue that's eventually expected from a fully mature market.

The debate about sports betting has shifted from "'Is this something we should consider?' to 'How should we go about doing this in a way that best serves our constituencies?'" said Casey Clark, the association's senior vice president.

The prospects for sports betting to expand into more states this year appear mixed.

A bill legalizing sports betting passed the Kentucky House and advanced Wednesday to the Senate, but still faces a high hurdle. Similar bills have died in the past in the Senate, and this year's version would a need three-fifths vote to pass.

Supporters also are taking another run at a sports betting bill in Minnesota and various other states.

In Missouri, attempts to authorize sports betting have gotten bogged down in the Senate over whether to pair them with regulations on slot-machine-style games that have been popping up in convenience stores.

In Georgia, sports betting bills have stalled amid debate about whether a constitutional amendment is needed, how to spend the potential tax revenue and whether to pair sports betting with the legalization of casinos and horse racing tracks.

The three most populous states -- California, Texas and Florida -- all currently lack online sports betting. The Seminole Tribe of Florida, which received exclusive state rights to run sports betting, shut down its online app in December 2021 after federal courts ruled it violated a rule requiring people to be physically present on tribal land when wagering.

After the most expensive ballot issue battle in U.S. history, California voters last November rejected a pair of rival sports betting initiatives backed by tribal nations and the gambling industry. Supporters are likely to try again, though it's unclear when that might occur.

Information for this article was contributed by Jeff Amy, Tom Davies, Andrew DeMillo, Brendan Farrington, Susan Haigh, Amy Beth Hanson, Steve Karnowski, Maysoon Khan, Holly Ramer, Bruce Schreinerand and Julie Carr Smyth of The Associated Press.

Print Headline: State looks for sports-bet payoff


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