A new report on iGaming tax benefits suggests US states could reap around $6.35 billion annually from the expanded gaming should they choose to legalize it.
VIXIO GamblingCompliance was contracted by Light & Wonder — formerly Scientific Games — to probe just how much tax money the US is leaving on the table each year from not having a more expansive iGaming industry. Currently, online slot machines and interactive table games are legal only in New Jersey, Delaware, Pennsylvania, West Virginia, Michigan, and Connecticut.
VIXIO, a regulatory intelligence firm, believes if more states would join the half-dozen iGaming markets, the tax benefits would be substantial. Researchers calculated that if each state that presently has land-based casinos and/or mobile sports betting would permit iGaming, the states would be projected to realize $6.35 billion in annual tax revenue.
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,” commented Howard Glaser, head of government affairs at Light & Wonder.
“The dozens of states that already have land-based casino gaming merely have to turn on the digital channel to realize tax revenues which are otherwise being siphoned off by the prevalence of illegal off-shore internet gaming,” Glaser added.
Light & Wonder took on its new corporate identity in March after selling off its lottery and sports betting businesses last year for $7.2 billion. The gaming manufacturer and turnkey online gaming platform provider says its future will be focused on internet casino gambling and retail products.
$30B in iGaming Revenue
VIXIO, which maintains its iGaming probe was conducted independently and without influence from Light & Wonder, which would benefit from iGaming expanding into new states, says if all current land-based and mobile gaming states venture into iGaming, the industry would be massive. There are currently 42 states that have legal brick-and-mortar casinos and/or online sports betting.
Researchers concluded that annual iGaming revenue from 42 states would likely top $30 billion. Though the tax benefit would depend on what sort of tax rate each state would impose, the study assumed an average 20% levy. That would equate to around $6.35 billion.
The six states that allowed iGaming last year reported a collective tax benefit of roughly $970 million.
iGaming Taxes Tops Sports Betting
Sports betting is one of a casino’s least profitable verticals.
“Unlike other pieces in the gaming industry — slots, table games, etcetera, [sports betting] is a low-margin business. There are times when sportsbooks make money, and there are times when sportsbooks lose money,” explained American Gaming Association President Bill Miller.
“And so the reality is, unlike with a slot hold or a table game hold, the percentage of revenue, vis-à-vis the overall handle, is always going to be a small number,” the gaming industry’s chief lobbyist added.
Sports betting being a low-margin business is why such gaming doesn’t generate nearly the same tax benefit as iGaming.
In 2021, the more than 30 states that permitted sports betting collected $560 million in associated taxes — $410 million less than what legal iGaming generated in only six states.
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