The opening day of Delaware sports betting generated $322,135 in handle, a respectable sum for a quiet time on the sporting calendar.
Delaware became the first state after the decision to activate legal sports betting. New Jersey followed suit on Thursday. Mississippi and West Virginia could go next. With that in mind, let’s compare the regulatory frameworks of these states to see who is making the
The potential ledger for Delaware
Let’s start this exercise with the obvious: we are assuming the same amount of handle each day, which it will not be. That goes for Delaware or anywhere else that adopts legal sports betting.
We can at least use that tally to examine some figures in ballpark terms, though. The opening-day handle of $322,135 annualizes to more than $117 million.
Using Nevada’s 24-year average win percentage of 5.52 percent, Delaware’s first-day win would be $17,782. Over a year of similar action, Delaware’s take would be just less than $6.5 million. That pales in comparison to Nevada’s $250 million win and $5 billion handle in 2017, but fits proportionally for Delaware.
Delaware sports betting operates under the state lottery. Casinos are not taxed; rather, they share revenue with the state. The government’s haul is significant: of that $17,782, Delaware would keep $7,780. Annually, that comes out to $2,839,700.
Remember that all states must pay the 0.25 percent federal excise tax on handle. Based on Delaware’s first day, that amounts to $805, or $293,825.
Looking beyond Delaware
How might other states that feature legal sports betting benefit from a first-day handle like that of Delaware?
There are lots of variables in trying to extrapolate here:
- States with more mature gambling economies like New Jersey and Mississippi likely will generate more action.
- There are obviously more people in other states, but the amount of handle and revenue will depend largely on accessibility to betting options, both land-based and mobile.
- Extrapolating numbers from one day is difficult, as there was excitement from day one of sports betting, and there was a limited number of things to bet on that day.
But we still can use their tax rates to get a sense of how much money is on the table if states saw that kind of handle. Keep in mind, most of these states are likely to see much more in average daily revenue.
New Jersey – 8 percent tax rate
$1,423 daily revenue – $519,395 annual revenue
(Online wagering will be taxed at 13 percent, so New Jersey’s revenue likely will be higher once this provision kicks in later in 2018.)
West Virginia – 10 percent tax rate
$1,778 daily revenue – $648,970 annual revenue
(West Virginia will also have mobile wagering)
Mississippi — 12 percent tax rate
$2,134 daily revenue – $778,910 annual revenue
Pennsylvania — 34 percent tax rate
$6,046 daily revenue – $2,206,790 annual revenue
(PA will also have mobile wagering)
Other factors to consider
That tax revenue certainly is not pure profit for states to plug into their budgets. Any state implementing legal sports betting will need to dedicate staff to administrative, compliance, and enforcement roles. That curve will be steeper initially for states that do not already have gaming infrastructure in place.
It also is important to remember that direct tax revenue offers only one piece of the economic puzzle. The sports betting amenity could draw new visitors to casinos, leading to greater spending on hotel rooms, rental cars, restaurants, entertainment, and other methods of gambling. That all can generate greater tax revenue in other forms.
More jobs will be created directly by legal sports betting as well, as sports books staff up across the country. That ultimately directs more revenue back into state and federal coffers as well.