The pace of the legalization of iGaming has dramatically lagged behind that of sports betting. For those states that have legalized sports betting but not iGaming, they are missing out on billions of dollars of taxes, according to a new study released by Light & Wonder and compiled by VIXIO GamblingCompliance.
The study, the U.S. iGaming State Tax Revenue Potential report, was released last week and highlighted the advantages of offering iGaming and the perils of not legalizing it.
“States are leaving billions of dollars in tax revenue on the table which could fund a variety of public programs and services without resorting to broad-based taxes,” said Howard Glaser, Light & Wonder’s global head of government affairs.
Glaser pointed out that in states where iGaming is currently not legal, residents are turning to illegal offshore gambling sites which provide no customer support and pay no taxes.
While 35 states, Puerto Rico and the District of Columbia have legalized sports betting only six— Connecticut, Delaware, Michigan, New Jersey, Pennsylvania and West Virginia—have also legalized iGaming. In the 30 states that have active sports betting at this time, bettors wagered $4.29 billion which produced only $560 million in taxes. According to the American Gaming Association.
In the six states that offer iGaming, the online casinos generated $3.71 billion in total revenue and $970 million in gaming taxes in 2021.
The report highlighted the Michigan success story, where the state legalized both sports betting and iGaming at the same time. It said that Michigan generated “significant revenues” just months after opening by “suitable marketing and product investment” by operators.
Conversely, the VIXIO report mentioned state that are missing out of significant tax revenue by failing to legalized iGaming.
The state of New York is leaving more than $400 million in tax revenue on the table by failing to legalize online casino games, according to a new study.
New York state Senator Joe Addabbo has already introduced a bill to legalize online casino games. “We are missing the ball here by not doing iGaming at this point,” Addabbo told the New York Post.
“It would stop the flow of money into other states and into the illegal market. And, we’re looking for more revenue for education and the ability to help those with an addiction.”
The iGaming issue arises as New York prepares to open the bidding process for three downstate land-based casino licenses.
Indiana Republican state Sen. Jon Ford, the president of the National Council of Legislators from Gaming States (NCLGS), said, “We certainly recognize that iGaming, when structured properly, has the potential to attract a broader demographic, and to become a meaningful source of state tax revenue.”
In Nevada, which has legalized online poker, iGaming is still not being considered. The decision is a clash between locals’ operators like Station Casinos and the big Strip casino companies.
MGM Resorts CEO Bill Hornbuckle said Nevada is “missing a significant opportunity for growth,” while acknowledging that lots of bricks-and-mortar casinos in Nevada are opposed to iGaming.
iDEA Growth Founder and General Counsel Jeff Ifrah, a noted iGaming lawyer, said that iGaming revenue could solve a lot of problems in states where it still is not legal.
“Every year that passes without a state embracing the opportunity to build its financial resources by legalizing iGaming is another year its residents miss out on better roads, education, police and fire services and health care,” said Ifrah. “At the same time, these states are allowing much-needed resources to flow freely to illegal, offshore gaming sites that have no regulations to protect against such things as underage gambling, fraud and deceptive advertising practices.”
