Report: US online gambling a potential tax pot of gold

The financial potential of online gambling in the US is greater than most realise. According to a new report by Vixio, prepared for Light & Wonder, legalising igaming in every remaining gaming state could generate billions in additional tax revenue for state and tribal governments each year.

The US commercial gaming industry is a massive market, with a total size of $66.66bn in gross revenue in 2023, according to data from the American Gaming Association. Within this industry, igaming holds significant potential.

Vixio’s updated report, “US iGaming State Tax Revenue Potential August 2024”, provides independent forecasts for the potential tax revenue that state governments could expect to earn if igaming were legalised in each state that currently has either legal land-based casino gaming, online sports betting, or both. It’s an update to an initial report produced by Vixio and published by Light & Wonder in 2022, reflecting more recent revenue figures reported by state governments as well as alternative assumptions regarding the tax rates that future igaming states may seek to apply.

Currently, online gambling is legal in only seven states: Connecticut, Delaware, Michigan, New Jersey, Rhode Island, Pennsylvania and West Virginia. Nevada permits online poker but not the full range of casino-style games.

Seven online gambling states generate $1.6bn in taxes

Even with its limited footprint, online gaming delivered $1.61bn in tax revenue last year.

The figure is particularly impressive when compared to commercial sports betting, which was legal in 29 states last year and generated $2.06bn in tax revenue.

Should all 44 jurisdictions with some form of gambling legalise igaming, Vixio predicts that state and local governments could see as much as $15bn in combined tax revenue each year.

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