It’s Super Bowl week! And whereas the sport received’t be in Arizona this yr, a good share of the betting shall be.
Last yr, Arizonans spent greater than $8 billion on sports gambling and because the enterprise continues to develop, state leaders need a bigger piece of that rising pie to fill main price range gaps.
Right now, the state will get solely about 10% of taxable income from these fashionable sports betting websites, which make up the bulk of Arizona’s gambling motion.
In Gov. Katie Hobbs’ proposed price range, she’s calling for that charge to be raised to 45% as a way to add one other $150 million to the state coffers. But is that lifelike?
Daniel McIntosh is a advertising professor within the sports enterprise program as half of Arizona State University’s W.P. Carey School of Business.
“Gov. Hobbs is suggesting we increase it from 10% to 45%, but is specifically carving that out only for casinos that are operating at over $75 million a month. And so currently in the state, only four really meet that,” McIntosh stated.
Those 4 are Draft Kings, Caesars, Fanatics and Fan Duel, which account for about three-quarters of the betting market.
Arizona’s present sportsbook tax charge is fifth lowest within the nation for states that authorized on-line sports gambling. New York, Oregon, Rhode Island and Illinois go as excessive as 50%.
“At 10%, we are at the very low end of where we could be,” McIntosh stated.
The tax charge enhance wouldn’t apply to Arizona’s brick and mortar casinos, solely on the net sportsbooks that take within the majority of the cash.
“Margins for these casinos are pretty small, it’s usually in the world of 2% to 3% of what they’re making as profit. So it is a substantial net for their cashflow operations. But remember a lot of these are operating digitally, so they don’t have a physical footprint in the state. A lot of those dollars then make their way to Las Vegas or New York or wherever their headquarters are,” McIntosh stated.
Sports betting has exploded because the 2018 Supreme Court choice legalizing regulated operations exterior of Nevada. According to the web site Legal Sports Report, greater than $600 billion has been wagered nationwide since.
In 2025 alone, Arizona accounted for greater than $8.5 billion.
McIntosh, who takes half within the faculty’s financial impression research for main occasions just like the Super Bowl, says it’s possible to count on extra income from this rising trade.
“It is a very substantial amount of money that is changing hands. I don’t have a problem with the government increasing the tax rate on the operators to better the lives of the citizens in the community who are spending those dollars.”
But there could also be a bigger drawback to resolve first: Saving the integrity of the video games to wager on.
A collection of current scandals within the NBA, MLB and even in school athletics have uncovered vulnerabilities within the system, principally relating to what are known as prop bets, enabling gamblers to wager on particular person athletes.
McIntosh finds them problematic, probably alienating lifelong followers who wager on particular person gamers’ statistical outputs.
“Let’s say I’m a huge Devin Booker fan and I think he’s going to score 20 points and he only scores 19. The Suns win by 25, but Devin Booker got only 19. We can have a subset of fans that are unhappy with the outcome of the game,” McIntosh said.
And McIntosh believes it may ultimately backfire.
“It drives increased engagement, but does it drive increased avidity? What are the impacts to the long term development of our fans, our fan bases, and what are some of the negative externalities?” McIntosh stated.
“Players are very active on social media, as they should be. But some of them will admit after a bad game they cannot go on social media because of the negative, blowback, the negative comments.”
He feels there wants to vary, particularly in what’s allowed for prop betting to avoid wasting the integrity of the video games themselves.
“And we’re already seeing that in baseball, right? When you’ve got a pitcher that’s spiking pitches on the first one and whether it has any impact on the outcome of the event itself, it’s having an impact on the integrity or the perceived integrity of the game,” McIntosh stated.
Raising the tax charge on sportsbook income in Arizona although might face main obstacles.
Tax-averse Republican lawmakers on the state Capitol have historically been against any kind of enhance, and the state structure requires a two-thirds supermajority from legislators for legal guidelines that elevate state income.