Revelations from the most recent Quarterly Survey of State and Local Tax Revenue (QTAX), conducted by the United States Census Bureau, have provided pivotal data regarding the burgeoning world of legalized sports betting in America. With sports betting now included in its list of revenue sources, QTAX reports for Q3 of 2023 show that tax and gross receipts from the activity have surged to nearly $506 million. Though this represents a significant 20.5% year-over-year gain from Q3 of 2022, it still falls below the peak of $571.5 million reported in the second quarter of 2023.
Amidst this novel financial landscape, New York emerges as a giant, contributing a staggering $188.5 million – almost 37% of the entire nation’s intake from sports betting tax. This amount dwarfs that of Indiana, the following contender, by over fivefold, which collected a sum of $38.6 million. It’s worthwhile to note New York’s unparalleled tax rate of 51% on gross gambling revenues, unmatched by any other state, as a contributing factor to its dominion over tax generation in this quarter.
Ohio and Illinois follow suit, with respective figures of $32.9 million and $32.4 million, securing third and fourth placements in the ranking. Pennsylvania claims the fifth spot with $28.8 million. These statistics delineate a clear picture of the leaders in creating revenue streams from sports betting.
Underlining New York’s preeminence, the state made public that it has broken its record for online sports betting revenue for two consecutive months. January revenues reached an all-time high of $211.5 million, improving upon the previous record of $188.3 million from December 2023 and reflecting an impressive year-on-year surge from the $149.4 million reported in January of the previous year. Despite this upswing, January did mark the cessation of New York bettors exceeding the $2 billion mark in monthly online sports wagers, with the January handle totaling $1.96 billion.
FanDuel, operated by Flutter Entertainment, continues to lead the market robustly in the Empire State, posting a revenue of $109.2 million in January – a record figure for a single operator.
Against this background, Penn Entertainment announced a strategic move, detailing its agreement to acquire the New York sports betting licenses held by Wynn Interactive Holdings, facilitating the launch of ESPN Bet in the state come 2024. This agreement involves Penn buying Wynn Resorts subsidiary Wynn Interactive’s sports wagering licenses for a sum of $25 million. Back in August 2023, Penn Entertainment had partnered with Disney’s ESPN, leading to the rebranding of its Barstool Sportsbook as ESPN Bet, and its subsequent launch across 17 US states in November. Jay Snowden, Penn Entertainment’s CEO and president, confidently alluded to this acquisition as an entry point into what he acknowledged as the most prominent sports betting market in the US.
The notable absence of igaming in New York, however, continues to perplex many, despite the state’s resounding success with sports gambling. Governor Kathy Hochul’s 2025 executive budget conspicuously left out any provisions related to igaming, dealing a fresh setback to the industry’s advocates. The outlook seemed more promising in light of New York state senator Joseph Addabbo’s introduction of a new bill, known as Senate Bill S8185, aiming to set the wheels in motion for legal online gaming within the Empire State. Regrettably, this piece of legislation faces an uphill battle amidst New York’s complicated regulatory landscape, leaving supporters in a persistent wait-and-see stance.
All things considered, as the United States navigates the complex webs of gambling revenue taxation, New York continues to lead the forefront, shaping the future of sports betting within the nation’s vast market. With each passing quarter, the QTAX findings reveal shifting patterns and possibilities, offering an everchanging glimpse into the socio-economic impacts of legalized gambling.
