Sports betting in Rhode Island has had a bumpy start, to say the least.
First, in March, the state received news that sports betting revenue was around 40% of original estimates.
Governor Gina Raimondo’s budget called for $2 million a month in tax revenue from wagering, but even with a surge of interest due to March Madness, the state only saw $775,000.
So, not only have early returns been disappointing, late last week, a lawsuit was filed claiming the state’s legislature circumvented laws by legalizing sports betting.
The lawsuit claims that the state’s constitution demands that any betting expansion must be approved by voters.
But on the heels of the lawsuit and disappointing returns, comes word of a study completed by Christiansen Capital Advisors, LLC that the state can expect revenues to fall in the coming years.
The study claims that the state can only expect to bring in $2.7 million in revenue by the end of the fiscal year that concludes in July.
This number is a fraction of the original estimate of close to $24 million a year in revenue quoted by Gov. Raimondo’s administration.
The Governor had to scale back estimates in the wake of disappointing returns several months ago with the latest projection standing around $11.5 million.
“CCA would recommend that the State of Rhode Island should prepare for the worst and hope for the best because revenue derived from sports wagering will be inherently volatile producing years of feast and famine,” the study concluded.
The state knows about the “famine” side to that argument when state casinos lost $900,000 in February due to the New England Patriots Super Bowl win.
“In sports wagering, which is focused on a very finite pool of sporting contests and heavily weighted toward championships and certain sports, sports wagering operators can and do lose, sometimes in a big way,” the report said.
The question now for Rhode Island is how they plan to supplement the low revenue figures moving forward.
Despite the grim news by the study, Rhode Island somehow remains optimistic on the future of sports betting in the state.
Officials still believe that the next fiscal year, revenues for the state should exceed $14.5 million.
“We would have liked to have been more on the mark with the estimate, but we’re a new player in a new market and it was off,” Department of Revenue spokesman Paul Grimaldi said.
“All we can do now is recalibrate, and move forward.”
Rhode Island believes that they’ll see a huge surge in revenue from the expansion into online betting at the end of 2019.
“Things are going to go online and mobile across the country at some point, so that’s something that every casino, every state, has to look to address at some point,” Grimaldi said.
Another factor that the Christensen study found to be problematic for the long term wagering revenue growth is the possibility that neighboring Massachusetts and Connecticut could legalize.
If both states pass a sports betting bill, then Rhode Island would, possibly, see a dip in traveling bettors from those two states.
The study puts estimates around $1.3 million in lost revenue each year through 2024 from the two states.
Despite the grim news for the coming years, the study does believe that Rhode Island will see the returns they were hoping for, with estimates reaching $30 million in revenue by 2023.
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