A few months into the endeavor, Pennsylvania is faring better than some other states in the early stages of sports betting.
A recent Associated Press article noted that four of the six states had fallen short of the tax revenue projections generated from sports betting. Rhode Island, the only state in New England with legalized sports gambling, was especially behind.
Rhode Island produced an average of $50,000 a month in tax revenues from sports gambling, although projections called for up to a million a month.
Pennsylvania, however, remains on pace to reach its projections, which includes money generated from both licensing fees and tax revenues. The AP report is correct that sports betting tax revenue is behind schedule. However, with licensing fees, the Commonwealth’s sports betting money is right in line with expectations.
According to a report from a closed-door budget meeting last year, the state hoped to take in $100 million from PA sports betting and online gambling for the fiscal year.
Sports betting licensing fees lead the way
Sportsbook licensing fees have provided the biggest benefit to Pennsylvania’s budget. Each sports betting license costs $10 million. To date, nine casinos have applied for that license. Only four casino licensees have not pursued a license yet.
Furthermore, full online casino licenses, which allow casinos to offer online poker, slots, and table games, also cost $10 million. (A license for one of those three games could be purchased for $4 million).
The PA online casino licensing process generated $94 million in licensing fees. However, it is unclear if any of that money went to cover the budget’s previous gambling revenue shortfall that resulted from delays in the process.
Online sports betting should be a boon for the budget
Sports betting has generated $2.5 million in tax revenue for Pennsylvania from November launch through February this year. But much bigger numbers should begin arriving in July.
PA sports betting apps should arrive this summer and that will almost certainly outpace the revenues generated from brick and mortar casinos.
According to Legal Sports Report, New Jersey took in more than $385 million in wagers this past January. Eighty percent of those wagers were made online. That led to $18.8 million in total revenue.
States besides PA eye online betting
Many other states may follow Pennsylvania into digital betting. According to an article on Harrisburg’s WITF, mobile sports betting is being considered in at least 14 states.
In Indiana, state Senator Jon Ford recognized mobile sports betting as simply one more sign of progress.
“Everybody’s using mobile to do all kinds of things we weren’t 10 years ago. It’s the future. It’s inevitable.”
Gambling revenues are best viewed in the long term
As most bettors can attest, sports gambling results can fluctuate wildly. The same holds true for sportsbooks. Therefore, it’s best to take a long-range view of the revenues they produce.
A single game can prove costly to a sportsbook, but in the long term, the books are typically profitable. For example, in Rhode Island, the state’s sportsbooks lost $2.35 million on the Super Bowl alone when the Patriots covered the spread. Even with that disastrous result, the sportsbooks have been profitable this year, albeit short of projections.
In Pennsylvania, March should provide the biggest revenues yet for the PA sportsbooks. According to betting analyst Dustin Gouker, Pennsylvania’s sportsbooks were expected to generate between $7 – $10 million in wagers solely on March Madness.
That sort of activity could produce record numbers for the state. It can also help tide them over until online betting launches.