A fall without college football could be just as wounding to state tax collectors as it would be to fans—costing sports betting states about $1 billion dollars in bets.
The sports betting industry, which generated $118 million in taxes last year, stands to lose one of its most essential revenue drivers as officials from the Big Ten and Pac-12 on Tuesday voted to postpone all fall sports indefinitely until at least the spring. The industry has already struggled in recent months because of other postponements and shortened seasons.
The move, stemming from concerns over the coronavirus pandemic, would deal a blow to sports betting states that are already strapped for cash as delayed tax filing deadlines and sales tax dry-ups burn holes in their revenues.
While other conferences, like the NCAA Atlantic Coast Conference and the Southeastern Conference, have been adamant about playing this fall, many view the recent announcements as the first dominoes to fall in the widespread cancellation of college football.
And if those dominoes do indeed fall, sports books would take a 12% hit to revenue, according to estimates from California-based research and advisory firm Eilers & Krejcik Gaming, LLC. They’re also expected to lose about $1 billion in bets, according to Gambling.com estimates.
The lack of college football will have a significant negative impact on sports betting’s ongoing rebound, and cash-strapped states will definitely see a hit to their gambling tax revenues, said Max Bichsel, vice president of U.S. business at Gambling.com Group Plc.
Loss of college football would erase a more-than-welcome funding boost for the 18 states that have gone live with legal sports betting since the Supreme Court’s landmark 2018 decision to lift the prohibition on the practice outside of Nevada. And the 43 states that report data are already short $52 billion in revenue collections this year compared with all of 2019.
“It will likely take a long time until we see any rebound in state tax revenues,” said Lucy Dadayan, a senior research associate at the Urban-Brookings Tax Policy Center, which provided the state tax collection data.
In the final four months of 2019, the top four states for legalized sports betting—Indiana, Nevada, New Jersey, and Pennsylvania—garnered a combined $4.5 billion in wagers when college football games were played. Sports betting providers hoped the college football season would return betting activity to pre-pandemic levels.
New Jersey—the most profitable sports betting state outside of Nevada—has lost nearly $1.6 billion in bets since mid-March, according to PlayNJ, a website that promotes legal gambling in the Garden State.
Over 47 million Americans were expected to legally wager $8.5 billion on this year’s March Madness NCAA basketball tournament before it got canceled, according to data compiled from the American Gaming Association, which lobbies on behalf of the industry.
The industry has made a few resilient strides however, posting record collections for non-traditional sports like ping pong and expanding its legal market to four more states and Washington, D.C., since mid-March.
“If the global pandemic causes the cancellation of this year’s college football season, sports betting operators will undoubtedly create new options to meet the continually growing demand,” said Casey Clark, senior vice president of communications at the American Gaming Association, which lobbies on behalf of the industry.