Most states in the U.S. have legalized sports betting. When it comes to online gambling, it’s a different situation. Only a handful of states have legalized online casinos. This means there are some very popular casinos with celebrity partnerships that state laws haven’t caught up with yet. They are going unregulated, and this puts consumers at risk.
Regulated online casinos
Regulated online casinos are available in seven U.S. states at present. Gambling regulators in these states have laws in place to protect consumers. They also benefit from casinos’ tax revenue. The seven states have collected $2 billion in tax revenue. This is far beyond sports betting tax revenue from many more states.
Unregulated online casinos
Other platforms are operating under the radar and going unregulated. An online payment method at a regulated casino is usually safe and secure but this is not always the case at unregulated casinos. Consumers are at risk of losing their money.
Lawmakers are figuring out how they can make money from these casinos. They account for nearly $4.6 billion in untaxed revenue every year. Some of them are even situated outside the U.S. in the Caribbean. Senate and House committees have been pushing to try and link the tax revenue from them to companies in the U.S. After all, players make their deposits in the U.S.
Opposition to regulation of online casinos
The convenience of being able to play casino games online isn’t lost on regulators in some states. They believe legalizing online casinos will present increased risks of irresponsible gambling. There are also concerns that online gambling will cannibalize brick-and-mortar venues.
Howard Glaser, global head of government affairs and legislative counsel at Light & Wonder, believes that unity among land-based casinos in a state could be the solution to passing online casino bills. Unity would give them more power. This would deal with the fear of regional and tribal players being frozen out of the marketplace.
Another potential challenge on the road to the legalization of online casinos is labor unions. Successful online casino platforms only employ a fraction of the labor that land-based casinos need to employ.
It’s unlikely that online gambling will really gain traction until the above issues are addressed. The issue is a topic in state houses across the country, even if many bills haven’t moved forward. Donald Trump didn’t impose nationwide regulations on gambling in his first term and probably won’t do so in his second. He has repeatedly said that he favors allowing states to make their own decisions.
Online gambling tax rates
It is interesting to look at the US taxation system and how it raises tax revenue. The national average for online gambling tax rates is 19%. More states are likely to give online gambling another look in this new year as budget pressures mount. New Jersey’s 13% tax on online sports betting and 15% tax on online casino games brought in over $414 million in tax revenue in 2023 and will definitely cross this figure when 2024 is assessed.