For the better part of four years, New York sports bettors looked longingly across to New Jersey – and also Pennsylvania, depending on what part of the Empire State you were in – as the duo were the first to embrace the new online sports betting landscape in mid-2018.
The Garden State (and once again, the Keystone State to a smaller extent) also benefited from the fact that New York did not legalize sports betting right away: some estimates put the total amount of bets placed from people coming across the various bridges into New Jersey at 25 percent.
But it was not just the sports bettors that were gazing at the record numbers New Jersey was posting each month: lawmakers in the Empire State saw potential tax revenue slipping through their fingers with every month.
Maybe that was not as important before the COVID-19 pandemic, but after it? New York needed to legalize sports betting quickly, and it finally did, as the Empire State went live in January of 2022.
Yes, the sports betting revenue numbers in New York have been massive. But the Empire State, and many others that have (Illinois) or will soon (Ohio) launched sports betting, are still missing out on a massive chunk of change that New Jersey has monetized very successfully.
Online Casino Revenues
According to this study done by data analyst Martin Eriksen of NJ.bet, which took into account the projected amount of iGaming tax revenue in New Jersey and then adjusted for population size and income differences (NY 15%: 1,055 million USD (NJ iGaming tax revenue 2022 projected) × (NY population / NJ population) × (NY per capita income / NJ per capita income) = 2,265 million USD), New York could be missing out on over $2.2 billion in tax revenue each year.
If New York taxed iGaming at 25 percent, that number would jump to $3.775 billion each year.
But it is not just the Empire State that could benefit from this. At the time of this study, only six states allowed online casino gambling: Connecticut, Delaware, Michigan, New Jersey, Pennsylvania, and West Virginia.
This time, New York lawmakers can basically look in any direction and see neighboring states raking in the cash from iGaming.
So, what are the numbers each state could expect if they use New Jersey as a guide?
If the following states were to introduce iGaming in 2023, what could they expect in terms of tax revenue based on the best practice example from NJ (15% tax for online casinos at 33 of the licensed online casino sites)?
Let’s take a look.
Estimates for iGaming Tax Revenues in Selected States (Annually)
Below, estimates for possible tax revenues in states with legal online betting or upcoming legal betting are depicted (million USD):
| State | iGaming tax revenue at 15% | At 25% | At 35% | Betting tax revenue, projected 2022 | Betting tax rate, retail/online (%) |
|---|---|---|---|---|---|
| AZ | 590 | 983 | 1,376 | 22.9 | 8/10 |
| CO | 619 | 1,032 | 1,239 | 13.7 | 10 |
| IL | 1,262 | 2,104 | 2,525 | 97.8 | 15 |
| IN | 567 | 946 | 1,135 | 29.7 | 9.5 |
| IA | 272 | 453 | 544 | 9.6 | 6.75 |
| KS | 255 | 425 | 510 | No data | No data |
| LA | 361 | 602 | 722 | 26 | 10/15 |
| MD | 630 | 1,049 | 1,259 | 4.8 | 15 |
| MA | 856 | 1,427 | 1,712 | No data | No data |
| NJ | 1,055 | 1,759 | 2,111 | 99.15 | 14.25 |
| NY | 2,265 | 3,775 | 4,530 | 654.3 | 10/51 |
| NC | 877 | 1,462 | 1,755 | N/A | N/A |
| OH | 981 | 1,636 | 1,963 | No data | 10 |
| TN | 586 | 976 | 1,172 | 50.9 | 20 |
| TX | 2,650 | 4,416 | 5,300 | No data | No data |
| VA | 845 | 1,409 | 1,691 | 34.1 | 15 |
| WA | 844 | 1,407 | 1,688 | N/A | N/A |
For New York – and Ohio, Illinois, Colorado, and on down the line – it looks to be a slam dunk: legalize iGaming, and start bringing in much-needed tax revenue on top of their sports betting takes.
Methodology
How did we do it?
NJ projected iGaming tax revenue of 1,055 million USD is the basis of the calculation. The states have been adjusted for population size and income differences.
For example, NY at 15%: 1,055 million USD (NJ iGaming tax revenue 2022 projected) × (NY population / NJ population) × (NY per capita income / NJ per capita income) = 2,265 million USD.
Sources:
- Income: apps.bea.gov, 2022 Q2 (SQINC1 State quarterly personal income summary: personal income, population, per capita personal income).
- Population: data.ers.usda.gov
- Betting taxes: taxfoundation.org/sports-betting-tax-treatment
Premise:
- Players will, over time, get the same player behavior as in NJ, not taking societal values etc. into account.
- The data is based on speculative criteria: the same tax and number of online casinos.
- Income adjusted to purchasing power (PPP): estimates have also been performed for income per capita adjusted for purchasing power, which changed the end result by up to 17% for OH, but in most cases 5-10%. For New York, a 2% difference was seen when adjusting for PPP.
Weaknesses:
- The calculation does not take retail and tribal casinos into account. Data shows a slight decrease in revenue of approx. 10% in Michigan after adopting online casino games.
Is online casino gambling legal in NJ?
Yes, New Jersey was one of the first U.S. states that legalized online casinos.
What is the best casino app for New Jersey?
Among top mobile casinos, we recommend BetRivers Casino, bet365 NJ casino and the BetMGM online casino app.
Fair Use
When using this data and research, please attribute by linking to this study and citing NJ.bet.
