$5 Million: Lost Tax Revenue Each Month Without MA Sports Betting This Football Season

Written By Chris Gerlacher on October 3, 2022
My experience with bonuses coming to Massachusetts sportsbooks, from play-ma.com

Every month of football season that Massachusetts delays sports betting legalization, Massachusetts could be missing out on $5 million in tax revenue. That $5 million includes the four major sportsbook brands and retail sports betting live simultaneously. 

Play MA forecasted Massachusetts’ data from all the other states that have legalized sports betting. We began from an estimated $600 per capita in sports betting activity, a safe estimate based on comparable states like Illinois, Michigan, and Colorado. Based on Massachusetts’ population, Massachusetts could see $4.3 billion in sports betting handle in its first full year. 

Assuming a January 2023 launch, Massachusetts could see $350-$400 million in handle each month of football season. With a 7.2% hold for taxable revenue and a 20% tax rate on mobile wagering, Massachusetts’ first football season could generate about $5 million in monthly tax revenue — and likely a little more during March Madness.     

“If sports betting in Massachusetts is worth $1.2 million per week, then significant potential state revenue is being squandered each week the launch is delayed,” Play MA editor, Connor Grootenhuis, said.

Lost Tax Revenue Across A Full Year 

Sports betting has its own rhythm throughout the year. Its peak season runs from September, when football season starts, to March, when March Madness ends many casual bettors’ interest in sports betting for the year. April through August dip, since the most popular sports are in their off-seasons.

That seasonality has implications for new markets that are launching. New markets grow rapidly for one to four months. New York plateaued after about one month. Colorado took about four. After that, the sports betting industry settles into the seasonal pattern. That growth is faster if they launch during the peak season than the slow season. But no matter when they launch, new sports betting industries plateau quickly. 

The real growth occurs annually, as sportsbooks attract new customers during the most popular sports games. Each year, more of those bettors wager during the slow season, increasing handle and tax revenue each year. 

Related news: MGM And Responsible Gambling

Why Massachusetts Sports Betting Isn’t Expected Until 2023

The Massachusetts sports betting bill set regulatory standards for the state’s Gaming Commission to follow. Those standards allow 15 permanent mobile licenses to be awarded. However, it also allows temporary licenses and sets no limit on the number of temporary licenses that can be awarded. 

That wouldn’t be an issue if the Gaming Commission felt it could deny licenses to applicants. However, the Gaming Commission believes it lacks that authority because the sports betting bill fails to address the issue. So, the Gaming Commission worries that it could be stuck investigating applicants for temporary licenses repeatedly, crippling its ability to regulate permanent license holders. 

That’s without considering the threat of lawsuits from any operators who don’t get their licenses awarded or renewed. Major sportsbook brands won’t want to have poured advertising money into Massachusetts only to have it wasted. Legal action could be worth the cost if it got them access to a major sports market like Boston.  

The anticipated 2023 launch is because of the time it would take to implement a solution to this problem. The legislature could meet and revise the bill’s language, which could lead to new arguments about other parts of the bill. Even if Massachusetts doesn’t face a long wait for sports betting, it’ll face a contentious one. 

Tax Revenue Timeline 

Massachusetts has serious regulatory challenges to overcome before getting its estimated $59 million in tax revenue in its first sports betting year. The state’s Gambling Commission’s hands are tied by legislative language that went overlooked by its authors and Governor Baker. Further, the Gambling Commission’s approach to temporary licenses could result in lawsuits that eliminate whatever tax benefits sports betting could bring. 

The Gambling Commission’s six to nine-month estimate of its time to launch would give Massachusetts sports betting in the spring of 2023. That could mean Massachusetts will miss out on NFL betting and the resulting tax revenue until the following season.   

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Chris Gerlacher

Christopher Gerlacher is a lead writer for Play MA. He is a versatile, experienced writer with a portfolio that ranges from political and legislative pieces to sports and sports betting. Gerlacher is a devout Broncos fan, for better or for worse, living in the foothills of Arvada, CO.

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