The administration of Rhode Island Governor Gina Raimondo allegedly misused sports betting data in estimating how much tax revenue the state would get from sports book. That is why revenues from the new betting is off by 90 percent, says the experts from American Gaming Association.
Now the state budget will have to do without about $40 million over the next two years. They were based on estimates for a “mature” market, Sara Slane, senior vice president of public affairs of the AGA told GoLocal last week.
The AGA’s statistics were provided by Oxford Economics.
According to the AGA, “We prove the value of the gaming industry through compelling research that supports best-in-class communications tools to inform policymakers and regulators. In addition, we elevate responsible gaming as a signature industry priority.”
AGA’s Caroline Ponseti, director, media relations, said AGA presented several possible combinations of tax rates and sports betting. The option that is closest to what the state actually adopted, “we estimated that Rhode Island would generate $6.4 million in sports betting gaming tax revenue, $17.1 million less than the state projected.”
Other factors that affected performance included the fact that estimates spoke of a “fully stabilized market,” not the market four months after implementation, a 15 percent tax rate, as opposed to 50 percent, and the state’s prohibition on collegiate sports bets, she said. She added that other factors in the program’s underperformance is that it launched without mobile betting, although that was later added.
Slane said she was unable to explain why Twin River and IGT, which operate the sports betting in Rhode Island, did not point out the flaws in the state’s expectations.
Paul Grimaldi of the state’s Department of Revenue told GoLocal “OMB [Office of Management and Budget] got to its estimate: the revenue estimate ($23.5M) is based on assumptions from an Oxford Economics report commissioned by the American Gaming Association.” He added, “OMB used the study’s “limited availability” scenario. That study estimated the state’s sports betting handle would be between $654.6 and $972.5 million.
Rhode Island’s sports betting revenues did improve in March, although they were still far less than what had been anticipated last year.
March, which included the very popular NCAA basketball tournament, made $1,548,230 for Sports Book Rhode Island. The state taxes this at about 50 percent. That was an improvement over February, when Twin River Worldwide Holdings lost $900,000 because of bets on the Patriots Super Bowl win.
Sports book launched the day after Thanksgiving, and since that time the total has been $1.8 million, with the state keeping $925,000. When lawmakers authorized sports betting, they were expecting $2 million a month.
The revenue could get a shot in the arm from last month’s law that legalized online sports betting.
The governor remains optimistic about sports betting. She told the Journal: “I think in the long run, the numbers are going to be what we thought, but we got a slower start. Maybe we should have known it was going to be slower and forecasted accordingly. I also think the world is changing and actually the money is going to be on the mobile phone.”
That could be the smart way to bet. About 80 percent of the sports betting revenue in New Jersey, for example, comes from mobile platforms.
