As legendary sports announcer Dick Vitale would put it, “Awesome, baby!”
Office pools, Cinderella stories and brackets full of obscure colleges can only mean one thing: The nation is gearing up for March Madness, college basketball’s national championship tournament.
And betting opportunities are more plentiful than ever.
Sports betting has now been authorized in 33 states, Washington, D.C., and Puerto Rico.
Since the repeal of near-total prohibition in 2018, sports betting legalization has spread quickly. It has now been authorized in 33 states, Washington, D.C., and Puerto Rico. Six of these do not have state-approved gambling but have worked with Native American governments to authorize it at tribal casinos. In 2021 alone, eight states passed laws to authorize sports betting operations or implement voter-approved ballot measures. Of the 17 states that do not have commercial sports betting, at least 14 of them have introduced legislation to implement it. Ballot measures paving the way for legalization will also be considered by Missouri and California voters in November 2022.
Most of the states that have authorized sports betting also allow sports betting over the internet, and several states that do not currently have mobile gaming have proposed allowing it. Because of its convenience, online sports wagering leads to more total bets and more gambling revenue for the state. In many states, online wagering constitutes the lion’s share of total sports betting. In New Jersey, which brought in $100 million in sports betting tax revenue in 2021, mobile betting accounts for over 90% of total wagers. Pennsylvania generated $105 million in sports betting tax revenue in fiscal year 2021, roughly three-quarters of it attributable to online wagers. By comparison, New York, which did not adopt online gaming until recently, collected only $1.86 million in sports betting tax revenue in FY 2021.
March Madness a Popular Bet
Popular sporting events like March Madness usually spawn an uptick in wagers. The American Gaming Association estimates that 47 million Americans placed wagers on March Madness games last year. Of those, 17.8 million people wagered online, up 208% from 2019. State-level data provides some insight into the relative popularity of different sports. In Nevada, football and basketball were almost dead even in terms of total wagering revenue in 2021 ($154 million compared with $148 million), followed by baseball ($68 million) and hockey ($16 million). Illinois saw a total of $5.86 billion wagered on professional sports in 2021, and a little over $1.15 billion wagered on college sports.
While the numbers associated with sports betting can be eye-popping, it’s important to consider them in the context of state revenues overall. On average, all forms of gambling account for roughly 2.5% of total state budgets. Even in the states where sports betting is most productive, such as New Jersey and Pennsylvania, it brings in roughly 10 times less revenue than the lottery and is a fraction of total casino gambling revenue. While tens of millions of dollars in revenue is nothing to sneeze at, it’s only a drop in the state revenue bucket.
And it’s debatable whether easy gambling opportunities are a net positive, given the potential unintended consequences: According to a study by the National Council on Problem Gambling, sports gamblers are twice as likely to develop an addiction as those who wager only through traditional venues such as casinos and lotteries.
Jackson Brainerd is a program principal in NCSL’s Fiscal Affairs Program.