Analyst estimates big windfall if Georgia legalizes sports gambling

(The Center Square) – Georgia could generate nine figures in taxes from sports betting over 12 months, a sports betting analyst estimated.

One measure lawmakers considered during the last session was Senate Bill 386, which, had voters approved, would have allowed sports betting under the purview of the Georgia Lottery Commission.

“In reviewing SB386, Georgia need not have all 16 available mobile licensees ready to wager from Day 1 to see a similar aggressive spend by operators,” Sports Handle’s sports betting analyst Chris Altruda told The Center Square via email. “Their promotional outlay would contribute to notably higher handle and establish a customer base while likely generating revenue that outpaces expectations.

“The key variable in projecting tax revenue for Georgia is how well operators would perform. Operators in both Ohio and North Carolina have notably outperformed expectations with relation to the industry standard hold of 7%. Buckeye State operators reported a 12.2% hold on adjusted gross revenue in the 2023 calendar year, while Tarheel counterparts crafted a 13.1% hold through March and April.”

The hold is how much sportsbooks keep on wagers. Altruda said it could be argued that the 7% industry standard is outdated.

Operators are now marketing bettors toward parlay wagering, which requires bettors to win multiple “legs.” These wagers offer higher payouts but favor the house, and states can see hold rates higher than 20% on parlay wagers, Altruda said.

“Even with all that said, the 25% tax rate proposed in SB386 – without allowing operators to deduct promotional revenue – would give Georgia a notable windfall in tax revenue, even if operator performance does not match Ohio or North Carolina,” Altruda said. “Ohio doubled its tax rate to 20% last summer while North Carolina launched sports betting with an 18% rate.”

If approved, Georgia might consider launching sports betting on Aug. 1, before the college football and NFL seasons start. Such timing would allow Georgia operators to leverage the Atlanta Falcons and the University of Georgia Bulldogs.

“Given the month-long runway during which operators would create a customer database with their various promotional offers, it would not be surprising if total sports betting handle for September reached $800 million when including promotional spend,” Altruda said.

Georgia could take in more than $17.7 million in receipts for the month and $212.8 million in tax money over 12 months, Altruda said.

However, he added that the rate of tax revenue is not constant and is subject to the outcomes of thousands of wagering events, as operators have good and bad months. He pointed to Ohio’s full-year hold of 12.2%, noting it was as low as 7.8% in November.