Sports Betting Growth Fuels Rise in Second-Quarter Tax Revenue

US sports betting revenue reached $2.3 billion in the second quarter of the year, setting a new quarterly record despite a slowdown in wagering compared with earlier this year.

Revenue generated from online and land-based sportsbooks rose 56.6% year-over-year between April and June, according to a report from the American Gaming Association released Wednesday. The boost was attributed in part to the launch of sports betting in additional states, including Massachusetts, Kansas, and Ohio. Maryland also launched online sports betting last November after months of delays.

The continued growth of the US gambling industry overall also drove up state and local tax revenue, with $3.62 billion in direct gaming taxes generated in the second quarter, a 9.6% increase over the second quarter of 2022. The increase, according to the industry report, was dominated by sports betting and online wagering, which are typically subject to higher tax rates than floor games.

Six months into 2023, commercial sports betting remains on track for another record year, with a year-to-date total of $5.15 billion, up 65.5% from the same period last year. Following the rollout of online sports betting in Massachusetts in March, the state promptly solidified its position as a “significant sports betting market.” In its first full quarter of operation, Massachusetts generated $155.3 million in revenue off $1.37 billion in total wagers, the report said.

Sports betting revenue has continued to rise since the 2018 US Supreme Court ruling that allowed all states to regulate sports betting. Since the betting ban fell, more than 30 states and Washington, D.C., have legalized sports wagering. Most set taxes between 10% and 15%, though some outliers, like New York, collect as much as 51% from sportsbooks.