The world of sports betting in the United States (US) has been nothing short of a financial touchdown. In a remarkable feat, the all-time state tax revenue from sports betting has recently surpassed 5 billion dollars. This milestone was achieved in less than six years since the first wagers were placed beyond Nevada’s borders in June of 2018.
In 2023, more than 40% of the total tax revenue came pouring in, amounting to a staggering 2.15 billion dollars. It was indeed a banner year for sportsbook operators across the nation. The known hold on gross sports betting revenue stood at 9.1%, well above the industry standard of 7%, and more than one full percentage point higher compared to 2022.
Legalized sports betting is a growing business in many US states and the tax revenue it generates funds various state resources from roads and highways to public education, law enforcement and gambling addiction programs.
The Super Bowl just took place on February 11 but there are many more big sporting events on the roster this year from March Madness to the World Series. So just how much tax revenue and gross receipts come from sports betting in states where it’s legal?
Top five highest grossing states
New York takes the crown, generating a whopping 1.46 billion dollars in tax revenue from sports betting since legalizing it in June 2019. The Empire State’s mobile tax levy in 2023 alone totaled 861.8 million, an increase of 169 million from the previous year. FanDuel, the national marketplace leader, would rank second as a state based on its New York tax payments totaling 835.2 million. DraftKings follows closely, contributing 535.9 million.
New Jersey has been a powerhouse, with sportsbooks raking in a total revenue of 3.27 billion since 2018. While the Garden State has taken in the third-highest tax revenue (approximately 412 million), it boasts the largest disparity between sportsbook revenue and state tax revenue.
Illinois has generated 366.3 million in tax revenue from sports betting. Its tax rate stands at 15%. Meanwhile, Pennsylvania has seen substantial success, with sportsbooks accumulating 537.9 million in revenue since 2018. The Keystone State’s tax rate is 34%. Finally, Tennessee rounds out the top five, contributing 212.2 million in tax revenue. The region’s unique tax structure is based on a percentage of the handle.
As sports betting continues to thrive, the competition for revenue intensifies among established gambling giants and relative newcomers. The value of sports betting handle has skyrocketed from 4.6 billion in 2018 to an astonishing 104 billion dollars in 2023. While revenue from sports betting remains a fraction of the total wagered, the industry’s growth is undeniable.
Sports betting tax revenue estimated to soar even higher in 2025
Analysts predict that tax revenue from this high-stakes industry will skyrocket in 2025, surpassing all previous milestones. The latest estimates indicate that the total tax revenue from sports betting will reach an astonishing 11 billion dollars by the end of next year, according to Morgan Stanley.
New York will remain at the forefront, with an estimated tax revenue of 2.5 billion in 2025, according to a report from Statista. New York’s mobile betting market has exploded, attracting millions of users and generating substantial tax income. New Jersey will follow closely, contributing around 2.2 billion. Its well-established online betting platforms and proximity to major metropolitan areas have been key drivers.
Illinois will boast a tax revenue of approximately 1.8 billion. The Chicago market, combined with a robust mobile betting ecosystem, has propelled Illinois to the top tier. Pennsylvania will continue to thrive, with an estimated 1.5 billion in tax revenue. Pennsylvania’s diverse sports betting options and competitive landscape have fueled its success.
Online platforms dominate the landscape, accounting for over 90% of sports betting activity. Mobile apps and user-friendly interfaces have revolutionized the industry, making it accessible to a broader audience. As smartphones become ubiquitous, the convenience of placing bets from anywhere has driven exponential growth.
Governments across the country are increasingly embracing sports betting. As of January 2023, 36 states have legalized it, with more expected to follow suit. The relaxation of regulatory frameworks has paved the way for operators and consumers alike. The sports betting industry is on an upward trajectory, fueled by technological advancements, changing regulations, and an insatiable appetite for excitement. As we approach the end of 2025, the stakes have never been higher, and the tax coffers have never been fuller.