With California as the leader

States could generate $6.3B in tax revenue and $30B GGR per year from legal iGaming in the US, report finds

Reading time 2:40 min

States could generate a combined $6.35 billion in annual tax revenue from legal iGaming in the US, a new report by regulatory and business intelligence firm VIXIO GamblingCompliance claims. Additionally, the analysis claims state tax revenue from online casino is already approaching two times that of sports betting.

The report, commissioned by gaming company Light & Wonder, provides state-by-state projections of potential iGaming tax revenue. According to it, California would net the most tax revenue at $853.1 million, followed by Pennsylvania -a state that has already legalized the vertical- at $572.3 million.

Florida would place third at $487.8 million, followed by New York at $428.2 million. The top five would be completed by Michigan – another state with an already-legal iGaming market – at $402.3 million. The report offers projections if online gaming were legalized in each state that currently has either legal land-based casino gaming or online sports betting, or both.

According to the report, should iGaming be legalized in all 42 states that currently allow gaming, the potential size of the US market alone could total over $30 billion. VIXIO estimates this could translate to a combined $6.35 billion in annual state tax revenue, assuming a 20% tax rate in newly authorized states.

The report comes at a time of growth for this vertical. According to the American Gaming Association (AGA), the six states in which iGaming is currently legal – Connecticut, Delaware, Michigan, New Jersey, Pennsylvania and West Virginia – generated $970 million in gaming tax revenue in 2021, compared with $560 million generated in the 30 states with sports betting.

As for annual iGaming gross gaming revenue (GGR) potential, California would expectedly also place first at $4.26 billion. But then Florida would take the second spot at $2.43 billion, followed by New York ($2.14 billion), New Jersey ($1.76 billion) and Michigan ($1.74 billion). This would amount to a combined $30.37 billion in GGR a year.

A potential win for New York

Among states that would benefit from an online gaming legalization is the Empire State, which already has secured the top spot for sports betting since its launch earlier this year. According to VIXIO’s forecasts, New York would place fourth for iGaming tax revenue, and third for GGR.

“New York is surrounded by iGaming states, namely New Jersey, Pennsylvania and Connecticut, which are witnessing hundreds of millions in annual revenue from iGaming,” said New York Senator Joseph Addabbo, Chair of the NY State Senate Racing, Gaming and Wagering Committee. “Those states have proven the model works and that iGaming can complement land-based casinos and ensure protections for players.”

New York Senator Joseph Addabbo

“When implemented safely and credibly, New York will also witness significant increases in revenue and educational funds from iGaming, while improving programs addressing gambling addiction,” Addabbo added, as quoted in a press release announcing the study. “It makes no sense for New York to lose that revenue to neighboring states and the illegal offshore market.”

A bill introduced by Addabbo and Assemblyman Gary Pretlow in February would legalize the practice, which is costing the state an estimated $400 million in annual tax revenue by remaining illegal. The report argues once legal, tax profits could even exceed the state’s already-booming mobile sports wagering industry, which netted over $300 million as of July.

Addabbo told The New York Post he hasn’t yet taken the issue up with Hochul. His push comes as New York is on the cusp of opening up the bidding process for three coveted downstate commercial casino licenses, which have already attracted the attention of top developers and gaming companies, reportedly including MLB’s New York Mets owner Steve Cohen.

New York is expected to make at least a combined $1.5 billion for all three licenses, a figure to which slot and table game tax revenues would then be added. According to Addabbo, legalizing iGaming would make the commercial casino licenses even more valuable. “It’s more of an incentive,” he told The Post.

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