Tax Revenue Online Gambling
When it comes to online gambling and demographic statistics, a UK study concludes that 17% of the population gamble online, resulting in £5.3 billion revenue for the online market alone. Most states could use $100 million in tax revenue One look at that $100 million figure should tell any state legislator considering legal and regulated online gambling all they need to know. The fact is, tax revenue from online gambling can pave a lot of roads. It can buy a lot of textbooks.
Tax Revenue Online Gambling Winnings
Initial sports betting revenue projections
The IGC hired Eilers & Krejcik Gaming, a leading research and gaming consulting firm to analyze the potential for legal and regulated sports betting in Indiana. The report was used as information as the bill legalizing sports betting was debated in the Assembly during the 2018 legislative session.
The report forecasts retail and mobile sports betting revenue, as well as the economic impact of sports betting on the state.
Taxes On Online Gambling Winnings
Tax Revenue Online Gambling Winnings
Several factors were analyzed to formulate the projections, including:
Revenue Online My Account
- Various gaming markets – both domestic and international
- The regulated gambling market in Indiana
- Indiana’s current economy
- Survey of area residents
Additionally, the projections assume the following from bill H1325 from the 2018 legislative session:
Taxes And Gambling
- Licenses limited to the 13 Indiana commercial casinos
- Retail and mobile betting would be available
- There would be an initial license fee of $75,000 plus a $5,000 annual administrative fee
- Online sportsbooks would pay a $10,000 initial license fee plus a $5,000 annual fees
- A flat 9.25% tax rate on gross sports betting revenue
Most of what was in the original bill made it to the final version and ultimately to the sports betting regulations.
There is one major difference in the licensing fees, however. Currently, there is an initial $100,000 license fee with a required $50,000 annual renewal payment. The tax rate was fixed at 9.5%.
The projections for the first five years of Indiana sports betting:
Gambling Tax Laws
| Retail Sports Betting Revenue | Mobile Sports Betting Revenue | Total Sports Betting Revenue | |
|---|---|---|---|
| Year 1 | $30.1 million | $26.1 million | $56.2 million |
| Year 2 | $90.1 million | $78.4 million | $168.5 million |
| Year 3 | $120.2 million | $104.4 million | $224.6 million |
| Year 4 | $108.1 million | $135.8 million | $243.9 million |
| Year 5 | $102.1 million | $154.0 million | $256.1 million |
The predictions account for market maturity in Year 3 and sports betting to be legalized in neighboring states soon. Legalization in neighboring states is important because Indiana is likely to draw out-of-state bettors across state lines to place bets. The impact of that increases with the growth of mobile sports betting.
Luckily for Indiana, a retail-only sports betting market isn’t realistic. The report indicated that a retail-only market would peak after three years and only earn about 46% of a combined retail and mobile betting market. The state has taken the advice to heart, offering a growing number of online betting options.