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The Missing Millions: Some States Are Still Waiting for the Gambling Windfall

As part of our ongoing investigation into video gambling and its impact in Illinois, we’re keeping an eye on broader gambling issues here and around the country. Help us by sending your suggestions and tips to [email protected], or tweet at us at @ProPublicaIL.

1. Some states are still waiting for the millions of dollars promised from legal sports betting.

Several states, hoping for financial windfalls, quickly legalized sports betting after a U.S. Supreme Court ruling laid the groundwork in May 2018.

So far, revenue results have been mixed, though sports betting in these states became legal less than a year ago, according to an Associated Press analysis:

  • First, the success story: New Jersey’s sports betting revenues rival Nevada’s. “From July through February, the state was bringing in about $1.8 million per month in taxes on sportsbooks.” Mobile sports betting has fueled the momentum.
  • In Delaware, tax revenues from sports betting plummeted from $1.4 million in January to a paltry $22,000 in February.
  • Rhode Island, the only place in New England with legal sports betting, had expected to generate more than $1 million a month for its state budget through its 51% tax on sportsbook proceeds. The actual revenue? About $50,000 a month ...”
  • West Virginia is taking in just a quarter of the monthly tax revenue it had projected.”
  • In Mississippi and Pennsylvania, tax revenue is half the projections.

In some ways, it’s similar to what happened during the first full year of video gambling in Illinois, when revenues lagged far behind projections.

Through 2017, video gambling brought in $1.3 billion less than predicted by legislators, based on a ProPublica Illinois analysis. The state legalized video gambling in 2009, and the rollout lagged until the first machines appeared outside of casinos in 2012.

More than two dozen other states, including Illinois, are considering legalizing sports betting, with proponents projecting that it would raise million of dollars in tax revenue.

2. The lure of sports betting money is fueling legalization debates across America.

New York: Some lawmakers pushed mobile sports betting as part of the state’s budget legislation. Despite that, Gov. Andrew Cuomo and other Democrats opposed it and it wasn’t included in the final version of the budget. Supporters had said it could bring in an estimated $90 million in revenue for the state.

Montana: The Montana House overwhelmingly approved legislation that would legalize sports betting and place the state lottery in charge of issuing sports betting licenses. The state Senate approved a separate bill that would place the Montana Department of Justice in charge of regulating betting. Both proposals are pending.

Louisiana: A state legislator filed a bill in late March that would allow parishes to vote individually on the legalization of sports betting. The bill’s sponsor estimates tax revenues would increase by $20 million to $40 million with widespread approval.

3. When education and gambling intersect.

Gold Rush Gaming is one of Illinois’ largest video gambling machine operators. It also recently participated in a public high school internship program.

A ProPublica Illinois reader shared a Daily Herald report profiling suburban Streamwood High School’s weeklong “mini-internship” program, which matched 39 students with local businesses and organizations to explore potential careers during spring break. Some students worked with the video gambling company and helped develop a promotional plan for a gambling cafe.

Keep in mind: Video gambling machines in Illinois have cannibalized casino tax revenues that are designated for state education programs, to the tune of a $70 million drop in education funding between 2013 and 2017.

What we’re also following:

  • NCAA seeks to ban college athletes from sports betting, which may be tough to enforce. Yahoo Sports
  • Broadcast media companies are getting into the sports betting game, with programming catering to fantasy leaguers. But for now, they’re not taking any bets. The Hollywood Reporter
  • Expect more states to legalize sports betting, even with the potential social cost of an increase in gambling addiction. A new Showtime documentary will explore the link between legalization and problem gambling. WAMU 88.5 — American University Radio

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Portrait of Derrick Clifton

Derrick Clifton

Derrick Clifton is a former communications manager for ProPublica Illinois.

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