Mississippi Committee Estimates Strong Impact of Online Sports Betting

A Mississippi committee published a report last week that said online sports betting could generate $27.1 million in tax revenue by 2029. 

The 13-member group submitted its findings in a 95-page report. The Mississippi legislature is planning to explore an online sports betting bill during the 2024 session, which starts on Jan. 2, though many lawmakers still oppose the expansion of gambling.

The state already explored online sports betting last year but failed to generate enough support to pass it into law.

Rep. Casey Eure (R) said in October that he will submit an online sports betting bill as soon as the 2024 session begins.

Eure was responsible for the 2022 bill, HB 606, which was later amended and created the Mississippi Mobile-Online Sports Betting Task Force. That task force was responsible for compiling the report that estimated the impact of a local online sports betting market.

Using the 8% tax rate that retail sportsbooks pay in Mississippi, the committee predicted that online operators would generate $6 million in tax revenue in 2025 and $12.6 million by 2029.

The committee also investigated the ramifications of other tax rates, including a 1-2% flat rate on online sportsbooks’ total betting handle on top of the standard revenue tax. They found that a 1% flat rate tax would add another $5 million in revenue in 2025 and $13 in 2029, and a 2% tariff would create an extra $13 million in 2025 and $27 million in 2029.

Many states also require online sportsbooks to pay a higher tax than retail sportsbooks. To cover their bases, the committee looked at the implications of a 12% and 15% tax on online sports betting revenue. 

The findings revealed Mississippi could stand to gain from $6.5-6.9 million in 2025 and $15.9-18.6 million in 2029.

Legal sports betting is one of the fastest-growing industries in America—but despite that, Mississippi’s retail market is on the decline. The $49.5 million handle in October was down 12% on October 2022, and the $7.34 revenue generated was also roughly a 5% decrease year-to-year.

Each of the first 10 months of 2023 barring September were outperformed by their 2022 comparisons. That resulted in lower tax payments to the state and is part of the reason the conversation over the online market is so contentious.

Pro-sports betting legislators argue that online and mobile sports betting are more accessible and popular than retail gambling, and the addition of these markets will provide a shot in the arm to the state’s public funding.

Jonathan Jones, task force member and SVP/General Manager of Harrah’s Gulf Coast, a hotel and casino in Biloxi, said that the introduction of online sports betting will help the gambling market grow in all aspects. 

“Sports betting applications provide an opportunity for casinos to reach a new audience that is different from their current demographics, thus [providing] new avenues for engagement with customers that will drive business to brick-and-mortar casinos,” said Jones. “For example, this new line of communication can be utilized to attract an OSB customer to the brick-and-mortar casino for special events or via an offer to redeem reward points earned on the mobile app.”

However, opponents believe that expanding the market will detract from patronage at local brick-and-mortar establishments.

Mississippi casinos often rely on tourists and overnight customers to help fill their gambling floors, and there is concern that the availability of online sportsbooks will only incentivize gamblers to stay out of the casino.

“The Mississippi gaming market operates on low margins,” Michael Bruffey, Vice President and General Counsel of Island View Casino Resort in Gulfport wrote to the task force. “Anything that will reduce or lessen our revenues will harm our businesses and it will harm Mississippi. To state it succinctly, statewide online sports betting will reduce our revenues, it will reduce jobs, and it will harm Mississippi.” 

Mississippi legalized retail sports betting in 2018 but is one of 12 states that have not expanded to the online world.  

 
Several states that have not legalized sports betting, including Alabama, are also planning to discuss legalization in 2024.