Arizonans have continued to embrace legalized sports betting, putting down $564 million in January bets and winning back $522 million, the vast majority of it through online applications licensed to the state’s pro sports teams and Native American tribes.
According to the monthly Department of Gaming report on the results of the fifth month of legalized sports wagering, the 12 online operations and two brick-and-mortar sportsbooks earned just over $40 million after federal taxes.
They did, however, give away more than $20 million in free bets. This left only $19.6 million subject to state taxes, which amounted to $1.9 million. The state levies an 8% tax on retail wagers and a 10% tax on mobile app wagers.
Free bet credits will cease
Over several years, the free bet credits, which are intended to entice gamblers, will cease. They begin at 20% of gross receipts in the first two years and then decline to 15% and 10% before ending in the sixth year.
Fantasy sports, the other legalized betting under the 2021 legalization, saw $3.9 million in entry fees and $431,00 in profits before state taxes. The state levies a 5% tax on fantasy sports profits, which brought in just over $21,000.
Fantasy sports betting went live in late August, followed by full-fledged sports betting on September 9.
Between the start of sports betting in AZ and the end of the year, gamblers wagered more than $1.7 billion, and sportsbooks profited roughly $60 million. As a result, the state received $6.1 million in taxes.
Tribal gaming compacts
Estimates for the amount of money the state will receive under the legalized sports betting law signed in April by Gov. Doug Ducey, along with updated tribal gaming compacts, vary widely. Budget analysts for the Legislature estimated a little more than $15 million per year, while industry supporters put the figure much higher. The Republican Rep. Jeff Weninger of Chandler, the bill’s sponsor, stated that it could cost up to $100 million per year.
The recently legalized sports betting was part of a deal that allowed the state’s Native American tribes to receive ten of the available licenses and professional sports teams to receive the remaining ten. Tribes can also offer a wide range of gambling options at their local casinos across the state.