The U.S. stands to see a potential 800% increase in iGaming tax revenue if it were to expand its number of regulated markets.
According to a new report produced by VIXIO, on behalf of Light & Wonder, iGaming could generate $14.98 billion in tax revenue if it were legalized in all 44 states that already have legal land- based casinos or mobile sports betting.
Only seven states currently offer legal iGaming: Connecticut, Delaware, Michigan, New Jersey, Rhode Island, Pennsylvania and West Virginia. Only six states offered it at the end of 2023 but according to the American Gaming Association, those six states generated approximately $1.6 billion. That rivals the roughly $2.06 billion in total tax revenue generated by legalized sports betting, offered in 29 states.
The vast majority of iGaming’s 2023 tax revenue was generated by the three largest regulated markets: Michigan, New Jersey, and Pennsylvania. That highlights why there is so much focus on New York adopting legalized iGaming, despite it being unlikely to become an early iGaming adopter.
At the NEXT Summit New York conference in March, New York legislators admitted iGaming in the state was in a “holding pattern.” New York State Sen. Joseph Addabbo Jr. said passing iGaming legislation this year would “be tough,” adding “It needs to be, in my opinion, governor-driven.”
Current outlook
Meanwhile, more than inertia is dragging on New York’s consideration of iGaming legalization.
The committee tasked with the decision for three new downstate New York casino licensees wants to push back its selection deadline by nearly a year. Although online casino legislation wouldn’t necessarily require direct affiliation with a brick-and-mortar facility, the companies that win the land-based casino bids would likely want a stake in an iGaming market.
If iGaming were legalized by the 44 states that currently have legal land-based casinos or mobile sports betting, the potential annual revenue generated by iGaming is estimated to be $47.86 billion. That would be a huge boost to the industry but as the VIXIO report demonstrates, it would also be a big boost to state and tribal government tax revenues.
