US Gambling Industry Fears Increased Tax Rates

Recent years has seen massive expansion in the US gambling market.

It has been said that this is particularly true and most recent documented to have been the case for online betting deals. There are always concerns for the future though and one of the worries for the gambling industry is the threat of higher taxation.

The amount of tax revenue that states can receive from gambling is one key reason for the recent expansion. Politicians haven’t suddenly become big fans of betting on the NFL or NBA. They look at their state budgets and realize more cash is needed, especially after the pandemic. Legalizing online sports betting can bring in much needed revenue.

One of the biggest successes has been in the state of New York. They took a while to legalize gambling but worrying looks at balance sheets changed their minds. Since mobile sports betting was legally launched in January of this year, billions of dollars have been gambled.

Companies such as FanDuel and DraftKings have been making healthy profits. It’s not just the gambling operators who are delighted though. The tax authorities are pleased too and one reason for that is the tax level in the state which is 51 per cent.

Recently a US sports betting regulatory survey was carried out. It was the work of SBC and VIXIO GamblingCompliance. It found that 21 per cent of those questioned believe the level of taxation and cost of licenses is their biggest worry for the future. 28 per cent mentioned the New York tax level as a cause for concern.

The fear that gambling companies have is that they could become a victim of their own success. States already receiving high levels of revenue may decide to increase tax rates and charge more when licenses are granted or need to be renewed.

Another area of concern is action taken against the levels of advertising. 65 per cent of respondents felt that there may be some action taken regarding advertising. They believe there is a need to limit the amount of marketing the industry carries out.

There is however the belief that the expansion of the gambling industry will continue. Just over 50 per cent of respondents (who included top executives, legal advisors and regulatory officials) are of the opinion that by 2025 there will be more than 45 states that have made sports betting legal. This year began with that figure at 32 and is slowly rising as this year progresses.

While betting on sport is becoming legal in an increasing number of US states, it’s not such good news for online casinos and iGaming with the figures for states where they are legal still in single figures.

Why is this the case? The survey showed that 25 per cent of respondents believe that the problem is the fear of gambling risks if iGaming is made legal. There are also worries about how their legalisation would affect land-based casinos. However, 55 per cent of those taking part in the survey believe by 2025 there will be ten or more states that will go down the legalization route.

This is the second VIXIO/SBC US Sports Betting Regulatory Survey. James Kilsby is the Chief Analyst for VIXIO and believes this new survey “showed a noticeable and understandable shift in industry sentiment” regarding the risks of more regulation in the US gambling industry.