Sports betting went live in the Commonwealth of Massachusetts in late January 2023, when retail sportsbooks opened their doors to get in on the rush of bets placed for the Super Bowl. Mobile sportsbooks went online a little over a month later, just ahead of the NCAA Men’s Basketball Tournament (March Madness, along with the Super Bowl, is one of the busiest sporting events of the year with three action-packed weekends of upsets and bracket-busting).
Cyclical Revenue Generation
As you might have guessed, the revenue that Massachusetts Sportsbooks brings in from the sports betting industry rises and falls on a cyclical basis. Most of the time, that’s set around predetermined events like the Super Bowl, March Madness, or the natural rush that occurs when the sportsbooks first open and the flood of promotion codes from sports betting apps makes it easy (and cheap) to get started on placing wagers.
Impact of Successful Sports Teams
Another thing that helps to spur a massive handle (both in terms of the money staked and the total number of bets placed, whether for one dollar or one thousand) happens naturally as a region’s sports teams find success. The Boston Bruins had the single-best regular season in NHL history this year, racking up a whopping 135 points.
As such, they were the betting favorites to win the Stanley Cup for the vast majority of the season, and even though they ended up flaming out in the first round, Massachusetts surely saw a massive influx of tax revenue with all the bets placed during their six-month stretch of dominance.
Similarly, the Boston Celtics paced the NBA for most of their regular season, having the best odds of winning the 2023 NBA Title since they fell just short last season. While they’re on the verge of elimination now as well, trailing the Miami Heat 0-3 in the Eastern Conference Finals, their impact on the betting market is similar as fans bought into the team during their run (or continue to double down now that they have roughly +800 odds of being able to come back in the series and secure the NBA title, with fans taking advantage of Hail Mary-like odds in the hope of catching lightning in a bottle).
Favorable Timing for Sportsbooks
Because of all these factors, Massachusetts picked the perfect time for its sportsbooks to go online. With 12 combined championships across the four major professional sports leagues since the year 2000 (and another seven championship game or series appearances in that time), Boston sports teams are always going to be in the thick of things.
Taxation and Licensing Fees
While everyone knows the mantra that the house always wins, in reality, it’s the Bay State (and its people) who win every time a bet is placed. Massachusetts doesn’t care who wins when a bet is placed, whether the wagerer cashes out successfully or if their bet fails and the sportsbooks rake in the cash: the state still gets to collect tax revenue regardless.
As of right now, Massachusetts levies a 15 percent tax on bets placed at in-person sportsbooks, compared to a 20 percent tax rate for mobile sportsbooks. This tax rate only applies to the sportsbooks: money earned from gambling is classified as income, so you’ll be taxed on your earnings according to the tax bracket you fall into at the end of the year when all of your wages (and winnings) can be compiled. Of course, you aren’t taxed on your losses and can claim them as losses on your federal and state income tax forms, provided you follow the proper protocols.
The state gets an additional boost from the licensing fees paid by casinos. In order to operate as a sportsbook, each of the businesses currently doing so had to pay a fee, clocking in at $5 million for the mobile sportsbooks. Those licenses only last for five years, giving the state a
a recurring wave of income nearly equivalent to the total exacted from the gaming revenue tax: as of right now, the Massachusetts state budget expects roughly $60 million per year in tax revenue.
That money is already earmarked for specific sources in the state budget. 45 percent goes toward government services, 27.5 percent falls into the Gaming Local Aid Fund, paid back into Massachusetts communities in the form of city and local government aid.
17.5 percent goes into the Workforce Investment Trust Fund, providing stronger work opportunities for youth in traditionally low-income communities, while the remaining nine percent and one percent go into the Public Health Trust Fund and Youth Development and Achievement Fund, respectively, as the state pays the money from the gambling taxes forward to the next generation.
Reports on tax revenue for the previous month come out roughly three weeks later: as of right now, we know that the state pulled in $9 million in revenue during three weeks of betting in March.
