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In its fifth month of existence, Arizona’s sports betting market generated a whopping $564 million handle in January, surpassing its $499 million December and bringing the total number of wagers placed since its September 2021 launch to over $2.3 billion.
Keep in mind, a ‘handle’ represents total bets placed, not total revenue made, and in January when you subtract the $522 million in total winnings from that handle it breaks down to just over $40 million in revenue once federal taxes are applied.
Of the twenty sports betting licenses granted by Arizona, the state’s Native American tribes received ten of those licenses and the state’s professional sports teams got the other ten, a fair split that helped that legislation pass through both chambers of state congress last year.
Arizona Diamondbacks President and CEO Derrick Hall addressed the value of regulating the betting market that already existed in that state since resident bettors were using offshore sportsbooks and local bookies to place their bets, saying:
There’s a lot of people that have been asking us to help legalize sports gaming. It’s been taking place anyways. Those that want to gamble, they’ve found ways to gamble. Now we can collect the data, control the data, we can watch it, have safeguards for responsible gaming, and we can collect revenue for the state, too.
Of course, the amount of tax revenue will start small and eventually grow.
In the case of January’s impressive $564 million handle, that generated $40 million in total sportsbook revenue after federal taxes, but that is not the figure that the state of Arizona gets to tax for its own purposes.
Before the Grand Canyon State can apply its own tax rate to that revenue, the sportsbooks are permitted per agreement to subtract the more than $20 million in free bets they gave away from that revenue total so that leaves just $19.6 million to be taxed by the Copper State.
Arizona’s sports betting legislation calls for an 8% tax on retail bets and a 10% tax on any online wagers, so applied to that $19.6 million in revenue it ends up being $1.9 million, money that should begin to increase as those giveaways gradually fade away.
As the Arizona sports betting market develops, experts anticipate revenue to grow along with it.
Last year in the four months that the Arizona sports betting market was operating, bettors wagered $1.7 billion which gave sportsbooks $60 million in revenue and that became $6.1 million in state tax revenue, an income stream that previously did not exist.
And that revenue stream should grow faster and wider as Arizona’s market matures, with the original sports betting bill’s sponsor, Republican Rep. Jeff Weninger, predicting it could get as big as $100 million per year.
That assessment might be optimistic, but the state legislature’s budget analysts projection of over $15 million a year seems more achievable, money that can now benefit residents instead of going elsewhere into pockets unknown.
Arizona joins over thirty other states that also have their own legal sports betting markets now, all giving American sports gamblers an easier and legal way to do what they have been doing all along anyway – bet on their favorite players and teams.
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Mike Lukas is a retired standup comedian turned freelance writer now living in Dallas, Texas, originally from Cleveland, Ohio. His love for the game of football and all things Cleveland Browns turned Mike into a pro blogger years ago. Now Mike enjoys writing about all thirty-two NFL teams, hoping to help football gamblers gain a slight edge in their pursuit of the perfect wager. Email: [email protected]More info on Mike Lukas
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