For years, states pushed for the legalization of sports betting on a federal level. Their actions were often met with opposition from sports organizations. However, things changed when New Jersey managed to make the Supreme Court lift the ban on sports betting. States began legalizing the activity. If their forecasts were true, they will earn a huge amount of sportsbook tax revenues.
That was one of the reasons why states began the process of legalizing sports betting in their jurisdictions. In addition, they expect sportsbooks to generate more jobs and support local businesses.
While states are hoping to earn a lot of sportsbook tax revenues, things were not going their way. In fact, they were getting lower tax revenues from sports betting activities. One of the main reasons is due to the slim margins on sportsbooks.
Low Sportsbook Tax Revenues
According to gambling news reports, there were months when operators made little or no profit. For instance, Rhode Island experienced losses in February due to a disappointing Super Bowl. As expected, most local bettors supported the Patriots. As a result, bettors won and sportsbooks lost a lot of money.
Among the six states with legalized sports betting, four didn’t reach their tax revenue estimates. Rhode Island has the highest tax rate at 51 percent. If you want to know how to open a sportsbook, don’t do it in that state. High taxes will kill your business.
In fact, the state hoped to generate $1 million each month from wagers. However, its sportsbook tax revenues were only $50,000 a month due to low profits.
In West Virginia, tax revenues were just a quarter of their predictions. Mississippi and Pennsylvania only earned half of their monthly estimates. There are several factors affecting sportsbook pay per head revenues. For instance, some states haven’t implemented mobile sports wagering that can improve their tax revenues.
Rhode Island and Pennsylvania are looking to legalize mobile sportsbooks. Although West Virginia already has mobile sports betting, it had to temporarily close its operations due to a dispute with its third-party provider.
