Editorial | Temper expectations for sports betting

Editorial | Temper expectations for sports betting

An Associated Press survey shows that legalized sports betting is no panacea for hard-pressed state budgets. And it will become even less lucrative as more states enact it.

One of the many issues on the agenda for Illinois lawmakers this spring is expected to be legalizing sports betting, something that became a possibility last year when the U.S. Supreme Court overturned a 1992 federal law that banned betting on professional and collegiate sports, except in Nevada.

Seven states, most of them in the eastern U.S., already have legalized sports betting, and at least 20 more states could do so this year.

But don't count on sports betting to be a home run for state budgets, the Associated Press cautioned.

In New Jersey, the first state to legalize sports betting in the wake of the Supreme Court decision, the state government has received less than $8 million in revenue from sports betting since June 14. That's less than the $25 million the state had projected for a full year. And even that seemingly optimistic estimate is less than one-tenth of 1 percent of the state's budget.

In Illinois, a state similar to New Jersey, that $8 million in proceeds over a six-month period would be far less than the state receives from either the lottery or riverboat gambling.

And the take from sports betting is expected to be further diluted as more states legalize it, said Lucy Dadayan, a senior research associate at the Urban Institute.

"I think states are being highly optimistic in their revenue forecasts for sports betting," she told Stateline, a state policy publication. "The early adopter states would certainly see revenue gains in the short run.

"But it's only a matter of time until legalized sports betting spreads across the nation and creates inter-state competition, eventually leading to declines in overall revenues from sports betting."

That likely would be the case in Illinois where nearly every single nearby and border state legislature — Indiana, Iowa, Kentucky, Michigan, Minnesota, Missouri and Ohio — is expected to take up sports betting this year.

The bottom line from Baye Larsen, who analyzes state finances at Moody's Investor Service: Sports betting will make up a "very, very small slice" of state revenue, and it will do little to help cover rising pension, Medicaid and education needs.

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