image of a computer and cellphone used for sports betting

Virtually all the proposals to legalize sports betting in 2021 have included a mobile component.

More States Let Sports Betting Go Mobile

By Jackson Brainerd | March 1, 2021 | State Legislatures News

Sports betting, which revenue-hungry states are quickly adopting, is a relatively low-margin venture compared with other types of gambling. That could change, however, if sports bettors can use mobile devices.

In the two and a half years following the Supreme Court’s decision to repeal the near-national prohibition on sports betting, half of the country has taken action to legalize it.

Sports betting currently is available in 20 states and the District of Columbia, and it’s legal but not yet operational in another five. A few states—North Carolina, New Mexico and Washington—have yet to approve gambling but have worked with Native American governments to authorize it at tribal casinos.

Only 26 states have legal casino operations, so when it comes to legalizing sports betting, one might think the craze will soon taper off. But one would be wrong. Sports betting has blurred the lines between lottery and casino gambling. Several states that don’t have casino-style gambling, including Montana, New Hampshire, Oregon, Tennessee and the District of Columbia, have legalized sports betting and are offering it as a lottery product. Of the 15 states that have introduced legislation to legalize sports betting in 2021, at least nine do not have legal casino gaming.


Sports Betting FOMO

The speed at which states have jumped on the sports-betting bandwagon is due in part to enthusiasm among the public. Gambling industry research estimates that 13% of Americans were planning to place wagers on 2020 NFL games, and tens of billions of dollars were wagered on sports books through 2020. The eye-popping numbers associated with the sports betting market is appealing from a state revenue standpoint as well, and the potential to generate tax dollars has been a big selling point for legalizing sports betting in many states.

Experts have noted from the outset, however, that sports betting is a relatively low-margin venture compared with other types of gambling and is unlikely to yield a windfall. Most wagers received are paid out in the form of prizes; nationwide, the average hold (pretax operator profit) for sportsbooks is just 7.2% of the total amount wagered. Even in the most productive sports-betting state, New Jersey, sports betting brings in roughly 20 times less in revenue than the lottery and represents a fraction of total casino gambling revenue as well.

“The teams and casinos trying to push sports betting say they could generate $150 million a year by their numbers,” says Lieutenant Governor Dan Patrick (R) of Texas, where mobile sports betting legislation is currently under consideration in the legislature. “That’s a lot of money. But it pays for half a day of our yearly budget. If you want to pitch sports betting or casinos, talk about jobs, talk about tourism. Don’t talk about money because the members know better.”

Still, as a growing number of states move to legalize sports betting, the states that choose not to will likely be ceding some of their residents’ gambling money to other states.

Kentucky Representative Adam Koenig (R) notes that residents of his state, which is approaching the prospect of legalization cautiously, are already going to other states to place bets. “I think legalization of sports betting in Kentucky is a good idea,” he says, “because we will be able to set up a framework where Kentuckians will be able to keep their money in Kentucky.”

Mobile Betting on a Roll

To maximize revenue and better ensure that sports betting dollars stay within their borders, many states have also made sports betting available on the internet. Intrastate mobile sports betting, which has been implemented or authorized in 14 states, the District of Columbia and Puerto Rico, lets bettors wager from a cellphone or computer. The mobile applications use geolocation data to ensure bets can be placed only from inside state lines. Of the states that have not broadly legalized mobile betting, three allow it very narrowly: Mississippi, Montana and Washington allow mobile bets to be placed only while on casino premises.

In terms of revenue, the mobile sports betting numbers from the early adopting states are striking: The lion’s share of sports betting activity is on mobile platforms.

New Jersey, which currently has the largest sports betting market, brought in $49.4 million in new tax revenue in calendar year 2020. Mobile betting accounts for the vast majority of the total amount wagered in the state—almost 95%. In fiscal year 2020, Pennsylvania brought in a total of $38.7 million in state tax revenue, roughly three-quarters of it attributable to mobile sports betting. The revenues in non-mobile-betting states are not as robust: New York, for example, brought in just over $1 million in sports betting revenue through the entirety of calendar year 2020. Mississippi collected slightly more than $4 million in FY 2020.

The question of whether it is beneficial to make gambling opportunities readily accessible via the internet is still a contentious one in several states. Making gambling opportunities available online could lead to higher rates of gambling addiction and destructive personal financial decisions.

But there are signs that mobile sports betting will, by and large, win out. Virtually all the proposals to legalize sports betting in 2021 have included a mobile component. Several early adopting, non-mobile states, including New York and Mississippi, have been debating whether to expand to mobile in light of their lackluster revenues relative to mobile gaming states. Furthermore, the COVID pandemic may have some state lawmakers thinking about stability in the future: Sports betting revenues in mobile states remained somewhat buoyant last spring, while brick-and-mortar casinos across the country were forced to shut down operations entirely.

Tip of the Iceberg?

States have largely approached mobile sports betting in isolation from other forms of gambling, but it seems possible that the rise of sports betting may lead more states toward other forms of gambling expansion. Only seven states allow lottery tickets to be sold over the internet, and just six states and the U.S. Virgin Islands have legalized online casino gambling. As more states adopt mobile sports betting, this inconsistency could help online gaming proponents make their case.

The legal gambling industry’s slow embrace of the internet, despite a sizable online gambling black market, is due in part to fears that online gaming would rob brick-and-mortar casinos and surrounding establishments of visitors and revenue. This fear no longer appears to be industrywide, and many stakeholders are now pointing to evidence that internet gambling will actually help casinos. Those inclined to bet online tend to be younger and are not necessarily active casinogoers; online gaming may offer the industry an opportunity to appeal to a broader market and could have a greater revenue potential than sports betting. Still, all bets are off on whether there will soon be a sea change.


Select State Sports Betting Revenues


FY 2020 State Tax Collected: $312,689


FY 2020 Tax Collected: $11,315,301


FY 2020 State and Local Tax Collected: $4,392,978

New York*

CY 2020 Tax Collected: $1,076,873


CY 2020 Tax Collected: $12,171,443


Retail Net Receipts FY 2020: $11,941,612

Mobile Net Receipts FY 2020: $13,790,229

State Tax Revenue FY 2020: $1,788,198


Retail Net Receipts FY 2021 YTD: $16,188,732

Mobile Net Receipts FY 2021 YTD: $30,332,398

State Tax Revenue FY 2021 YTD: $3,140,176.29

New Jersey

Calendar Year 2020 Retail Sports Betting Revenue: $2,732,333

Calendar Year 2020 Internet Sports Betting Revenue: $46,700,068

Calendar Year 2020 Total Revenue: $49,432,401


Calendar Year 2020 Total Tax Revenue: ~$17,738,798 (sports pool win x 6.75%)


FY 2020 retail sports betting tax revenue: $9,646,774

FY 2020 mobile sports betting tax revenue: $29,019,644

FY 2020 total revenue: $38,666,418

Rhode Island

Retail Book Revenue FY 2020: $14,897,786
Mobile Book Revenue FY 2020: $3,808,671

Total Book Revenue FY 2020: $18,706,457

Tax: $9,540,293


Retail Book Revenue FY 2021 YTD: $8,753,266

Mobile Book Revenue FY 2021 YTD: $8,577,590

Total Book Revenue FY 2021 YTD: $17,330,856

Tax: $8,838,736

*Does not allow mobile sports betting.

Jackson Brainerd is a policy specialist with NCSL’s Fiscal Affairs Program.

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