Study: MA Sports Betting Impact ‘Largely a Wash,’ May Hurt Casino Revenue
The first year of legal sports betting in Massachusetts was “largely a wash” for the state’s economy, creating very few new jobs and showing early signs that it may be cannibalizing revenue from the state’s higher-taxed casinos, a new study has found.
Minimal Economic Impact Beyond Taxes
As reported by WWLP, the study from the UMass Donahue Institute found that the primary economic benefit of sports betting in 2023 was the $90.8 million in tax revenue it generated.
Beyond that, the report, which was presented to the Massachusetts Gaming Commission, painted a picture of a new industry with a surprisingly small footprint on the state’s broader economy.
The largely mobile-first industry created “very, very, very few” new jobs in the state, a net addition of just 118 jobs. This stands in stark contrast to the 15,431 net jobs created by the introduction of land-based casinos.
The study also found that mobile operators spent only about 4% of their payments on Massachusetts businesses, compared to the 45.8% spent by casinos.
The Cannibalization Threat
The most significant warning from the study is the potential for sports betting to eat into the state’s casino revenue. The report noted that casino revenues declined by 0.9% in fiscal year 2024, the first year-over-year decline since the state’s first casino opened in 2015.
“The immediate leveling off of casino revenue once sports betting was introduced is striking,” the report stated. While researchers are not yet making definitive claims, the trend is a major red flag for state finances.
This is because sports betting is taxed at a much lower rate (20% for mobile) than casino slots (49%). If bettors are simply shifting their spending from high-tax casinos to low-tax sportsbooks, the state’s overall gaming tax revenue could eventually decline.
Shifting Entertainment Dollars
The study found that the vast majority of money spent on sports betting was not new spending but was simply reallocated from other activities.
Of the $470 million “spent” on mobile sports betting in 2023, the report estimated that 71% ($333.7 million) was money that would have otherwise been spent on other forms of discretionary entertainment.
“People are probably shifting their spending away from other types of discretionary spending, and towards this,” said Thomas Peake, the Donahue Institute researcher who presented the findings.
“I think that it’s more likely that someone’s going to the casino less, or they’re going out to the movies or to the bars less.”
The Jobs Disparity
The stark difference in job creation between sports betting and casinos is a key finding of the report. Peake explained that the thousands of jobs required to run resort-style casinos are “such a big part of the casino’s economic impact,” an impact that mobile sports betting simply does not replicate.
While mobile operators employed an average of 1,185 people per quarter in Massachusetts, the report notes that most of these jobs, likely at Boston-based DraftKings, existed before sports betting was legalized. As a result, they do not count as a new economic impact from the law change.
Despite the muted overall economic impact, the direct tax revenue from sports betting did significantly exceed lawmakers’ initial projections.
When the law was passed, annual state tax revenue was estimated to be between $35 million and $70 million. The actual figure for 2023 was $90.8 million, and for the first full fiscal year, it hit $116.7 million.
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