Vermont Tax Revenue Reflects Sports Bettors’ Winning Fall

U.S. sports bettors are having a (comparatively) fantastic football season at sportsbooks’ expense. It’s leading at least one state to alter its sports betting tax revenue projections.

Vermont bettors' big season

The Green Mountain State collected $6.3 million in 2024 tax revenue from the state’s three legal sportsbooks, 10% less than officials budgeted. After generating around $3.5 million in taxes the first six months of the year, the state projected another $3.5 million from football season. This was a conservative estimate, as books generate more handle in the year's second half from football. Operators, historically, also make more profit, which means more taxes.

That was not the case in 2024 in Vermont and most other states with legal sports betting. Tax collectors and sportsbooks had to recalculate due to an usually strong win run for NFL and college football bettors during the year's fourth quarter, partly due to favored teams' successes.

Sportsbooks only held 7.1% of October bets last year, compared to a 9.3% average for the year overall. Even with an improved November (10.7% hold), bettors had an even more profitable December, with books holding 6.7% (among those that publicly reported so far).

“Some of the things that we've been seeing since the start of (July) is that the winning payouts are consuming more of the handle, which means we have less adjusted gross wagering revenue,” said Wendy Knight, commissioner of the regulatory body that oversees Vermont sports betting, during a meeting of state lawmakers Thursday.

Vermont’s figures reflect similar bettor success in other states. In New Jersey, one of the nation’s largest markets by handle, books only held 5.2% in December, a decline from 8.5% in 2023. New Jersey’s sports betting revenue declined 42.6% in December 2024 compared to December 2023.

Sportsbooks' responses to revenue declines

Ahead of what will be much anticipated fourth-quarter corporate earnings announcements, some of the U.S.' largest publicly traded sportsbooks already declared reduced revenue projections.

FanDuel parent company Flutter Entertainment cut its Q4 revenue forecast from the $6.05 billion-to-$6.25 billion range down to around $5.75 billion. The nation’s largest sportsbook by handle attributed the decline in part to “favorable outcomes for bettors.”

Rival DraftKings, the second-largest book by revenue, also indicated it suffered from a strong season for customers. The company intends to launch a monthly subscription service for parlay boosts, potentially generating an alternate revenue stream to ameliorate the fluctuations of winning bettors.

Parlays have been a significant reason why U.S. sportsbooks saw their win percentage grow each year since the Supreme Court struck down the federal wagering ban in 2018. Parlays traditionally have higher holds than straight bets and the proliferation of single-game and in-game parlay options have increased sportsbooks’ bottom lines.

One of the biggest gambling stories of 2024 was the success of sports bettors. In Vermont, bettors did so well that the state didn't make enough tax revenue from sportsbooks to meet its fiscal year budget projections.

— Ryan Butler (@ButlerBets) January 17, 2025

Even with the rough final three months of 2024, sportsbooks continue to set financial records. Regulated books in states with publicly available financial reports will show operators took in roughly $145 billion in bets last year, an increase from $121 billion in 2023. With more state revenue reports released in the coming weeks, the books already generated nearly $13 billion in revenue, an increase from $11 billion the year before.

Meanwhile, the 9.3% average hold for calendar year 2024, including unusually unfavorable fourth quarter results, would be the highest such win percentage for books since legal online bets outside Nevada began in 2018.

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