A comprehensive report released by the Mississippi Mobile-Online Gaming Task Force last month makes a strong case for the state to vastly increase wagering tax revenue by adding a digital component.
Beyond that, the paper filed on Dec. 15 serves as a far-reaching research tool for states considering digital legalization in that it not only includes the history of wagering in Nevada dating to 1931, but it addresses issues ranging from tax rates to the potential for cannibalization to a review of problem and responsible gambling funding.
The report will likely play into decisions made during the Mississippi legislation session, which opened Tuesday and runs through May 5. sports betting in 2018 and currently has 26 commercial casinos and three tribal casinos, all of which offer in-person wagering.
State lawmakers have struggled to come to a consensus on whether to add online betting apps to the mix, but the expectation is that lawmakers will seriously consider the issue this year. Bills must be introduced by Feb. 19.
Mississippi is among a handful of states, including stakeholders are hoping will legalize some form of sports betting this legislative season. Missouri’s session opens on Wednesday, Georgia’s on Jan. 8, and Minnesota’s on Feb. 12. All four states have discussed and, in some cases, voted on legal statewide online wagering during multiple sessions, but none has ed a mobile measure.
Taxes, population, sports to bet on relevant 693r21
According to the Mississippi report, the tax rate is a critical factor during the state legalization process. As of the end of fiscal year 2023, the 29 U.S. jurisdictions that allowed online wagering took $246 billion in wagers between FY 2019-23, which resulted in $19.9 billion in gross revenue and $3.5 billion in tax revenue nationwide.
These numbers do not include Maine regulators launched that state’s market Nov. 3, but neither are included in the report. The numbers also do not reflect handle or revenue from six retail-only states that do not currently report revenue numbers.
PSA for the #SportsBetting peeps: There will be a 4-state thread for: #Michigan, #Pennsylvania, #Mississippi, and #Louisiana starting at 3-3:30 pm ET.
In the interim, please read about the U.S. topping $100 billion handle for 2023 (click pic for story):https://t.co/BvDOy9CaNA
— Chris Altruda (@AlTruda73) December 20, 2023
“Tax rate and population play a significant factor in how much revenue a state can expect to receive from legalizing online sports betting, casinos, and the lottery,” wrote the task force. “Significant growth would likely be spurred by the adoption of online sports betting, the addition of retail sports betting locations near new population centers, interest/growth in new sports to place bets (e.g. esports), or a federal effort to stop illegal sports betting.”
The task force examined multiple ways for Mississippi to capitalize on digital betting, including taxing adjusted gross revenue or handle. In either scenario, the state stands to vastly increase its take. Through November, Mississippi had collected $33 million in taxes since August 2018. In the study, the task force assumes 20% growth in each of the first five years that digital wagering is live, while estimating that total handle could double between a 2025 launch and 2029.
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How much and what to tax worth considering 6f1q70
Mississippi currently taxes adjusted gross revenue at 12%, which is a combination of an 8% state tax and 4% local tax. According to the study, the most lucrative taxation model would be a 2% tax on total handle, which it said by 2029 could net the state $27 million in tax revenue per year compared to $5 million using the current model.
To date, the only state that taxes based on handle is still trying to determine what benefit, if any, the state has seen from the change.
Handle tax in TN.
"…will make Tennessee the first state to tax sportsbooks based on the total gross wagers acceptet… replacing a 20% tax on adjusted gross income for sportsbooks."
Lee signs bill to charge Tennessee sportsbooks 1.85% on gross wagers https://t.co/tapbhEUHCT
— Alfonso Straffon 🇨🇷🇺🇸🇲🇽 (@astraffon) May 19, 2023
“PEER staff notes the tax rate plays a significant factor in how much revenue the state can expect to receive from legalizing online sports betting,” according to the report. “More money has been New York ($3.1 billion), but New York has brought in more tax revenue ($1.3 billion) than New Jersey (less than $500 million) due to its 51% tax on mobile sports betting revenue compared to New Jersey’s 14% tax.”
Since PASPA was overturned and digital wagering has proliferated, it’s become clear that online betting s for about 90% of handle and, ultimately, tax revenue, across the country.
Will there be enough operators to go around? 5j1sx
Given the number of commercial and tribal casinos in Mississippi, it’s interesting to consider how many would be in favor of digital betting. The state’s 26 commercial casinos, five of which only offer kiosk betting, responded to a task force survey seeking information about job creation, capital investment, operating costs, and ways to track ancillary revenue and where bettors are coming from.
The 29 casinos in the state are operated by a total of 16 different companies, as some have multiple locations. PENN Entertainment owns five Mississippi casinos; Caesars Entertainment owns four; the Choctaw Nation owns three; and Bally’s, Boyd Gaming, Churchill Downs Inc., and Foundation each own two.
Some of the current Mississippi casino operators have platforms they could launch for digital betting — PENN’s Betr or Tipico, to choose from.
Of the two biggest wagering operators in the nation, FanDuel has an existing nationwide agreement with Boyd Gaming for market access.
When PASPA was overturned in 2018, Mississippi regulators and casinos were prepared to move forward quickly with retail sports betting. The legislature had in 2017 repealed part of a law that made sports betting illegal, and the first casino sportsbook opened on Aug. 1, 2018, making Mississippi the third state behind Delaware and New Jersey to begin accepting sports wagers outside of Nevada.
Since then, three out of four border states — Louisiana, and Tennessee — have gone live with legal, online sports betting. Alabama, where lawmakers again have gambling expansion on their own agenda, is the lone border state where wagering in any form is illegal.
Mississippi lost out when Louisiana launched 1sc3g
Because Mississippi will be on the back end of the digital legalization wave, it would not be set up to get a bump from consumers crossing the border to bet.
With the exception of Mobile, which is on the southern Alabama-Mississippi border, most of the border is rural, and the task force’s report cited the 2023 American Gaming Association State of the States report, which showed that Mississippi retail sports betting suffered a 7.7% annual decline in 2022 after digital and retail wagering went live in Louisiana.
Among the concerns of the study committee is the cannibalization of casino revenue should legal digital sports betting lay the foundation for legal iCasino. According to the report, the Innovation Group found a net 10% decrease in casino revenue between 2019-22 in states with legal online casino, but suggested that tying online casinos to retail casinos could help to minimize this decline. Many operators use cross-promotions to draw digital sportsbook consumers into brick-and-mortar casinos, including offering loyalty points that can be exchanged for meals or hotel stays.
By the time the report was filed, it was outdated in a handful of areas. For instance, it does not acknowledge the most recent states that have gone live with sports betting, and it stated that the District of Columbia allocated $200,000 per year for problem and responsible gaming initiatives, when in fact Mayor Muriel Bowser last summer spearheaded a decision by the D.C. Council to eliminate that funding.
Mississippi does not currently earmark any portion of gaming revenue for problem and responsible gambling initiatives, though the state legislature in 2023 did appropriate $75,000 for FY 2024.
