US States are losing revenue to unregulated offshore gambling – changing this trend could be profitable!
“Gambling, though widespread in the United States, is subject to legislation at both the state and federal level that bans it from certain areas, limits the means and types of gambling, and otherwise regulates the activity.” – Legal Information Institute
Presently, 48 US states allow some form of gambling, including state-run lotteries, within their borders. Hawaii outlawed gambling even before it became a state. Likewise, Utah’s Latter-Day Saint majority has banned gambling entirely in its state constitution.
44 states are home to some form of casinos and allow charitable gambling. Most of those allow lotteries and parimutuel betting, but only 33 states permit commercial gambling of any type. Commercial gambling includes traditional and riverboat casinos, racetrack parimutuel betting, and online casinos or sports betting.
So how would legalizing these commercial forms of gambling help the states that don’t allow these activities?
Gambling Revenue in the US
According to American Gaming Association figures, US gambling generated a record $60.4 billion in revenue in 2022. The previous year saw $53.04 billion in revenue, meaning a 13.87% increase between the periods.
Considering these figures don’t include any revenue from the 523 tribal casinos countrywide, any future legal casinos could substantially increase these figures. The revenue also doesn’t include any illegal gambling monies, which is all currently lost offshore.
Of the 33 states that permit commercial gambling, 30 showed gambling revenue growth in 2022 compared to the same period in 2021. In Nevada, the gambling hub of the US, casinos had already generated 10.2% more revenue by the end of November 2022 than over the whole of 2021.
Even a small portion of Nevada’s $13.5 billion figure could make a huge difference to a fully legal gambling landscape in many states that currently lack regulation.
Online Sports Betting & Casino Gaming
New York has become the US epicenter for sports betting. According to the New York State Gaming Commission, residents spent $16.6 billion on sports betting through mobile apps in 2022. Legalized sports betting came into operation in New York in January 2022. There are currently eight legal sportsbook apps operating in the Empire State.
Sportsbook operators in New York pay a sizeable 51% tax on their profits. As a result, the $1.4 billion generated from New York sports betting in 2022 grew state coffers by over $709 million in tax alone over the same period.
Besides the tax generated, New York accrued another $200 million through licensing fees. Hence, the state’s revenue increased by more than $900 million in 2022 from mobile sports betting alone.
The Californian casino landscape is one that’s considerable lagging behind in proactivity, much like in Texas. In these states, among others, players currently rely on offshore sportsbooks to place their bets and enjoy their favorite slots and table games. As such, all generated sports betting and casino revenue is being lost to unregulated gambling markets abroad—and we can only assume that these figures are considerable, thanks to the number of people living in both states.
Allowing legal sports betting to operate would generate more state revenue. These tax and licensing figures could be of great benefit to the states concerned.
Tribal-State Gaming Compacts
29 US states have agreed tribal-state gaming compacts within their borders. All these are in compliance with the Indian Gaming Regulatory Act of 1988 (IGRA). These compacts afford Indian tribes to operate Class III gaming activities on their lands, in tandem with the involved states’ authorities.
The National Indian Gaming Commission (NIGC) recently released its 2022 gross gaming Fiscal figures. During the Fiscal year of 2022, tribal-state gaming compacts across the US generated $40.9 billion, up by 4.9% from the previous Fiscal period.
US states with existing gaming compacts benefit substantially from these gaming agreements. As a result, state revenue is healthier because of them.
Florida is currently involved in litigation after agreeing to a 30-year compact in 2021 with its Seminole tribe. A U.S. Circuit Court of Appeals for the District of Columbia ruling recently overturned a halt to the compact delivered by the U.S. District Court in November 2021. The recent ruling paves the way for online sportsbook servers to legally operate on Seminole land.
Subject to appeals, sports betting is now legal in Florida. Other US states where online betting is illegal should watch this landmark case. The eventual result may pave the way for similar tribal-state compacts elsewhere. These would allow states to generate revenue through regulated online casinos and sportsbooks.
Roulette (Image: pexels.com)
Regulated and Safer Gambling
Legalized gambling brings with it the opportunity for higher levels of control within the industry. With these comes the ability of the states involved to regulate gambling in ways that will benefit bettors.
Regulation creates a safer gambling environment for players. It cuts down the chances of online scams and fraud taking place. Regulated gambling also means states can provide greater levels of support to those fighting gambling addictions and other related problems.
Moving outside the US, let’s use the example of the Canadian province of Ontario. Ontario’s gambling model shows how transparent and mindful regulation can benefit players, operators, and authorities alike.
Ontario legalized online gambling in April 2022. By that time, the Alcohol and Gaming Corporation of Ontario (AGCO) had spent many years building its online gambling model. The existing model allowed for a smooth transition to regulated online casinos and sportsbooks.
As a result, the gambling authority can regulate online operators in a manner that benefits every party. The operator and the bettor are both happy and extra revenue lands in the province’s coffers.
Ontario has been proactive in placing restrictions on misleading advertising and marketing. Through proper and open regulation, every operator remains mindful of maintaining gaming integrity and security. They also need to continually highlight responsible gaming. AGCO provides information and avenues of help to those bettors battling gambling problems.
In short, the Ontario model shows how beneficial legal, regulated gambling can be for all parties in the process. Many US states could benefit from the Ontario model. It could form a foundation for minimizing any potential risk of legalized gambling within their borders.
Gambling Revenue (Image: pexels.com)
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