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Bye-Bye Billions

Bye-Bye Billions

The pace of the legalization of iGaming has dramatically lagged behind that of sports betting. For those states that have legalized sports betting but not iGaming, they are missing out on billions of dollars of taxes, according to a new study released by Light & Wonder and compiled by VIXIO GamblingCompliance. The study, the U.S. iGaming State Tax Revenue Potential report, was released in August and highlighted the advantages of offering iGaming and the perils of not legalizing it. States are leaving billions of dollars in tax revenue on the table which could fund a variety of public programs and services without resorting to broad-based taxes. In states where iGaming is currently not legal, residents are turning to illegal offshore gambling sites which provide little customer support and pay no taxes. While 35 states, Puerto Rico and the District of Columbia have legalized sports betting, only six—Connecticut, Delaware, Michigan, New Jersey, Pennsylvania and West Virginia—have also legalized iGaming. In the 30 states that have active sports betting at this time, bettors wagered $4.29 billion, which produced only $560 million in taxes, according to the American Gaming Association. In the six states that offer iGaming, the online casinos generated $3.71 billion in total revenue and $970 million in gaming taxes in 2021. The charts at left show how much more tax revenue was derived from iGaming versus sports betting in those six states (top), with the other chart estimating how much tax revenue goes uncollected while states ignore legal iGaming.

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