The year 2020 has been bad for many reasons, and the various states of America are feeling the financial strain thanks to Covid-19. Nationwide lockdowns have given states a blow when it comes to finances, many of their relied upon tax streams have evaporated.
Those in charge know that things need to change and they need to do so fast, so it should come as no surprise to you that the door is now open for industries to try and plug the gaps that have been left. One of those is online sports gambling, something that looks set to surge in 2021.
Many states are already forecasting huge shortfalls for both 2020 and 2021 giving the US economy huge problems. On average, states are expected to lose 10% of their tax revenue in 2020, and that then increases to 20% in 2021.
To talk sums of money here, New York State is forecasting a shortfall of $14.5 billion, Californis is looking at $54.3 billion and Florida over $16 billion.
How Does Online Gambling Help?
The key here is that there are many states that have legalised betting in recent years, but only very few of them have added online gambling to that. For many states right now, betting is something that you can only do in-person, and the way the world has changed due to Covid-19, this is no longer a viable route for them to go down.
For example, those in New York are allowed to gamble at the moment but they have to do it in-person. This means driving from home and going to a local betting office to place their wagers. In neighbouring New Jersey, online sports betting is allowed to take place, it is one of seven states to offer legal online sports betting.
Players can travel to New Jersey and place their sports bets online if they wish, taking advantage of top betting promotions in the process. This means that New Jersey will be able to claim the tax revenue from these bets, something that would normally have ended up in New York prior to lockdown.
Figures after lockdown show just the kind of impact this is having. In June 2020, $165 million in wagers was placed in New Jersey. A month later, July was $315 million wagered, of which the state sees around 9.5% in tax and revenue sharing. This gives them a 65% year on year boost compared to last year.
This is additional money going into the tax fund of New Jersey, and money that is no longer being spent in New York, and it is all down to online sports betting, nothing else. The figures coming in are relatively small to the deficit that New Jersey currently have.
However, this is a growing market, and further cuts to illegal gambling will only push more legal wagers through, and ultimately make more money for the area. With this, it would be no surprise to see more states allow online gambling, and in turn, more people to bet online, which should see gambling stocks surge next year.
This article does not necessarily reflect the opinions of the editors or management of EconoTimes