PHOENIX (AZFamily) — Sports gambling is growing in popularity. According to the American Gaming Association, twice as many people are expected to place bets on March Madness as on the Super Bowl.
In December, $849 million was wagered on sports in Arizona. However, only $2.6 million was generated in privilege fees, the taxes that sportsbooks and gambling sites pay the state.
The small tax revenue has raised concerns from critics who believe Arizona taxpayers are missing out.
Will Humble, executive director of the Arizona Public Health Association, has no problem with legalized gambling but doesn’t approve of the disproportionate tax revenue the state receives from Arizona’s multi-billion dollar sports betting industry.
“This is a public good that we should be benefitting from as residents of Arizona,” said Humble. “We’ve been benefitting a little bit, but nothing like we should be.”
Victor Matheson, a professor at the College of the Holy Cross in Massachusetts and an expert in state gambling deals, says Arizona’s 8% to 10% tax rate on sports betting profits is significantly lower than that of other states.
“That’s a fraction of what we are seeing in a place like Massachusetts, where I am,” said Matheson. “New York state has a tax rate of 50%. So New York is making far more money than Arizona is on its sports betting industry.”
Critics of Arizona’s sports gambling system say lawmakers gave operators a sweetheart deal when sports betting was legalized in 2021.
Humble believes the low tax rates, and low licensing fees, currently $150,000 a year, need to go up to help pay for education, health care and other state programs.
“The Department of Gaming has the ability to raise licensing fees,” said Humble. “That would be the only thing I would say, hey look, its been four years now and we see what value licenses are to licensees, and we think people of Arizona should be getting a better deal and raise those licensing fees so we all benefit a little more.”
The Arizona Department of Gaming sent a statement, saying, “The Department routinely reviews its fee structure as part of regulatory oversight. Any adjustments to licensing fees for operators would require a formal rulemaking process, including stakeholder input and regulatory review. At this time, no changes are being considered.”
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