Record Breaking Revenues in May from Sports Gambling in Arizona

Hits: 5

State Tax Collection Rose by Close to 200 Per Cent MoM

Just a year after Arizona legalized gambling on sports in April 2021, the state Department of Gaming reported record breaking revenues for the sector and a month-on-month (MoM) tax collection increase of 196.34 percent from $1.64 million in April to $4.12 million in May this year. Thus, the sportsbook industry has contributed roughly $30 million to the state of Arizona since the business was allowed.

“Since the start of legal event wagering, we have seen approximately $30m in privilege and licensing fees contributed to the state,” the Director of the Arizona Gaming Department Ted Vogt said, while “event wagering figures continued to look strong,” according to the state regulator’s latest report.

“The newly emerging event wagering industry in Arizona continues to impress, with over $460m wagered and over $4m in privilege fees in the month of May,” Vogd pointed out.

Operators Register over 150 Percent MoM Growth in Gross Revenues Despite Decline in Total Wagers

During the 31 days of May, operators in Arizona registered a total of $456.65 million in wagers from online betting and $4.58 million from retail sportsbook outlets. Thus, the total value of accepted bets was $461.45 million marking a 10.03 percent decrease from April’s collection of $512.87 million. Despite the decline in total wagered amunts, sportsbook operators’ gross revenues rose with a little over than 150 per cent MoM.

Gross revenues for May before deducting free bets and promotional credits came to $55.16 million, marking a 88.59 per cent growth over the $29.24 registered in April. After the deductions totaling $13.78 million, gross revenues stood at $41.4 million, jumping with 150.89 per cent month-to-month compared to April’s $16.5 million.

Among the operators, FanDuel emerged as the leader raking in $19.51 million in gross gaming revenue, followed by DraftKings with $12.19 million, and BetMGM took the third position with $4.86 million.

The Transition from Black Market to Faster, Safer and Legal Sportsbooks

The four years after the US Supreme Court allowed states to authorize gambling on sports have seen a gradual transition from illegal, black market and offshore sports betting to faster, safer and legal wagering, mostly on fast withdrawal betting sites accessed through mobile phones.

In May 2018, the Supreme Court voted 6 to 3 in favour of striking down the then quarter-of-a-century old Professional and Amateur Sports Protection Act of 1992 (PASPA). The federal law banning states to legalize wagering on sports events had been challenged by New Jersey, which quickly became the first state to allow legal bookmaking.

“The legalization of sports gambling requires an important policy choice, but the choice is not ours to make. Congress can regulate sports gambling directly, but if it elects not to do so, each state is free to act on its own. Our job is to interpret the law Congress has enacted and decide whether it is consistent with the constitution. Paspa is not,” Justice Samuel Alito stated.

According to estimates by the American Gaming Association (AMA), the size of the illegal sports gambling market in the US was around $150 billion annually. Wagering was done mainly over offshore sites or through illegal ‘barroom’ or ‘corner’ bookies, with betting options limited mostly to pre-game predictions if a team would win or lose a match. Customer protection and even confidence that winnings will be actually received were virtually non-existent.

Prior to the Supreme Court ruling, legal betting was possible only in the states of Nevada, Montana, Oregon and Delaware which had legalized some forms of the activity prior to PASPA coming into force.

Currently, more than two-thirds of all states have already authorized sports betting and even more states are considering doing so, while Americans have wagered a total of $125 billion on legal bets and operators have contributed $1.3 billion in state and local taxes since PASPA was struck down.

Even though illegal wagering has not been wiped out yet, with more states following the legalization trend, regulated betting will keep growing at the expense of the black market.

“Americans have never been more interested in legal sports wagering,” states AMA CEO Bill Miller. “The growth of legal options across the country not only protects fans and the integrity of games and bets, but also puts illegal operators on notice that their time is limited.”