| Americans wagered a record $119.84 billion on sports betting in 2023, boosted by new states coming online. Source: svetikd/E+ via Getty Images. |
While spending on legal sports betting reached new heights in 2023, the rate of growth could slow this year in the absence of new states adopting the practice.
Americans wagered a record $119.84 billion on sports betting in 2023, up 27.5% from 2022, according to the American Gaming Association’s Commercial Gaming Revenue Tracker. Those bets translated into $10.92 billion in revenue in 2023, a 44.5% jump from the prior year. The difference in the sum of all bets placed relative to revenue growth was tied to a 9.1% national hold percentage last year, up from 8.1% in 2022, according to the gaming industry’s trade association. The hold refers to the percentage of money that a sportsbook or bookmaker retains after all bets have been settled.
The 2023 year-end figures will continue to grow as the American Gaming Association (AGA) noted they do not yet include the most recent data from Kentucky and Arizona.
AGA executives attributed the overall industry improvement to a legal sports betting footprint that has expanded to 38 states and the District of Columbia.
The sports-betting industry benefited from five states becoming operational in 2023: Kentucky, Maine, Massachusetts, Nebraska and Ohio. Together, those five states contributed $1.49 billion in sports-betting revenue last year.
Ohio finished the year fourth among the states in terms of sports-betting revenue with $936.6 million. Massachusetts was ninth at $483.2 million.
Legal sportsbooks finished 2023 on a high note as the fourth quarter attracted wagers of $40.02 billion, up 34.4% from the final period of 2022. That included bets on NFL and college football, MLB’s post-season, and the starts of the new NBA and NHL seasons. Revenue totaled $3.41 billion, up 30.8% from the prior-year period.
Enactment outlook
The first quarter of 2024 should also produce strong industry revenue, with the AGA estimating that Americans bet $23.1 billion on the 2024 Super Bowl and a new state coming online soon. North Carolina is set to offer online sports betting March 11, in time for the March Madness college basketball tournaments.
Despite the solid start for 2024, the year will face a difficult comparison to 2023. AGA Senior Vice President of Government Relations Chris Cylke told reporters Feb. 20 that it is unclear how many more states, if any, will join the legal sports betting roster this year.
“Some of them have pretty significant political challenges in terms of getting sports betting itself enacted,” Cylke said, “When we look at the map, there could be potentially two or three states that have some activity and get it across the finish line this year. There could be zero, which would be disappointing, but that’s where we are right now with the progress that we’ve made over the past almost six years.”
Alabama, Georgia and Missouri were mentioned as states that could potentially see legislative movement this year.
AGA Vice President of Research David Forman said that in the absence of significant state additions, growth in 2024 and 2025 could come from increased activity in maturing jurisdictions. Forman pointed specifically to 2023 gains made by New Jersey and Illinois. New Jersey legalized sports betting in June 2018, just one month after the Supreme Court struck down a federal ban on the practice. Illinois legalized sports betting in 2020.
The legal sports betting market will continue to grow from bettors migrating from illegal wagering outlets and from new customers coming into sports betting in general, Forman said.
In 2023, New York registered a 24.2% year-over-year increase to finish as the state with the highest revenue at just under $1.70 billion. New Jersey, up 31.9% to $1.01 billion, inched past Illinois to reclaim the second spot. Illinois’ revenue grew 26.1% to $1.00 billion. Slipping behind Ohio, Pennsylvania was fifth with $686.9 million in revenue, up 15%.
Total gaming
All told, the US commercial gaming industry scored a new revenue record for a third straight year, with each sector posting their top mark. The AGA reported that total revenue from land-based casino games, sports betting and iGaming reached $66.52 billion for the calendar year, a 10% gain from the previous record set in 2022.
When the National Indian Gaming Commission reports later this year, total US annual gaming revenue will approach $110 billion.
Collectively, brick-and-mortar casinos pulled a 3.3% gain in 2023 to $49.36 billion from slots and table games, while iGaming, which currently only occurs in six states, registered a 22.9% revenue rise to $6.17 billion.
Gambling taxes generated $14.4 billion for state and local governments in 2023, according to the AGA, a 9.7% increase from 2022 levels.
Commercial land-based gaming — encompassing casino slot machines, table games and retail sports betting — accounted for $50.02 billion, or 75.3% of the total revenue in 2023. Online gaming generated $16.43 billion, representing 24.7% of total revenue.
Jurisdictional watch
Among the 35 commercial gaming jurisdictions that were operational in 2022 and 2023, 31 reported an increase in combined revenue from land-based casino games, sports betting and iGaming. Twenty-eight registered new annual records.
Three states — Florida, Indiana and Mississippi — sustained low single-digit declines in 2023. Washington, DC, which only offers sports betting, had a 17.6% retraction, the greatest drop among all jurisdictions. Washington is home to the Commanders in the NFL, the Wizards NBA team, the Capitals in the NHL and the Nationals MLB team.