ASU’s Daniel McIntosh: Arizona Sports Betting a ‘Qualified’ Success So Far

ASU’s Daniel McIntosh: Arizona Sports Betting a ‘Qualified’ Success So Far
Fact Checked by Michael Peters

The one-year anniversary of sports betting in Arizona is this Friday, with billions in wagers placed and millions in tax dollars coming into the state so far.

The Grand Canyon State has reported close to $5 billion in wagers and $16 million in taxes through its first 10 months of reporting (through June), making it one of the top states for operators in the country.

BetArizona.com chatted with Daniel McIntosh, who serves as senior lecturer at Arizona State University’s W.P. Carey School of Business, to get a sense of how the Arizona betting apps market has performed to date.

Below is a transcript of that conversation, edited for brevity and clarity.

With football season underway, come to BetArizona.com for the best Arizona NFL promo codes.

Bonus Bets Expire in 7 Days. One New Customer Offer Only. Must be 21+ to participate & present in AZ. Gambling problem? Call 1-800-NEXT-STEP. Visit BetMGM.com for Terms & Conditions. US promotional offers not available in NY, NV, or Puerto Rico.

Online Arizona Sports Betting a Success

BetArizona.com: How would you assess the success of Arizona sports betting as we approach the one-year anniversary?  

Daniel McIntosh: It’s a great question. I think most people are going to start thinking of it from a revenue perspective. And it's important to distinguish some of the terms that are commonly used, but I think often misunderstood by the public. I think if you look at some of the reports that are out there, you'll see terms like handle, revenue, privilege fees, revenues, tax and tax revenues.

And all of these are used somewhat interchangeably when they are all a little bit different. So, if we're talking about revenue to the gaming operators, they've generated somewhere around $170 million in revenue after subtracting out the free bets offered since September, or at the one-year mark when they launched. This metric is important because it's the base that the tax revenue is calculated from.

So, the tax revenue has come to about $16 million through the most recently reported June figures. For Arizona, there's a 10% tax on online wagers and an 8% tax on retail wagers, which is how we get to the roughly 9.5% tax rate that gives you that $16 million. Projections for Arizona were somewhere between $12 and $25 million per year. And then there's projections of that growing to about $30 million by 2024.

So, if we look at that $16 million figure, we're basically at the midpoint of projections. And that translates to the sports betting launch going pretty well here in the Valley.

BetArizona.com: As someone who has worked in and around the business community of Phoenix and Arizona for a long time, what seems to be working with sports betting here? Conversely, what seems to not really be living up to the billing so far in your opinion?

McIntosh: So, I think the online and mobile betting are both doing great. What hasn't quite shown the same promise is retail or in person sportsbooks, or what we call the brick and mortar locations. These are still in the initial testing/proving process, and many have just opened or will be opening soon.

The upcoming football season, the NBA basketball season, those will really help fill in some color on how well those efforts are going.

As expected, the marketing and opt-in of new customers is dying down. Not unexpectedly, though, because adoption has happened. Many of the habits have been formed for the customers. And we've seen a substantial pullback by some major players like Caesars as they focus on areas where they can drive the most revenue where companies like DraftKings and FanDuel have been the dominant player so far in Arizona.

So, we've seen the online and in-app gambling doing great. The brick and mortar stores, the in person sports books, are still trying to live up to the billing.

Arizona Sports Betting Popular With Women

BetArizona.com: What’s surprised you most about the Arizona sports betting market?

McIntosh: ASU’s Global Sports Institute released some interesting data back in January about the demographic profiles of the Arizona gaming customer, which I thought was pretty interesting. I wasn't entirely surprised to see young Hispanic males as some early adopters, given the popularity of football and soccer here in the Valley. But I was a little surprised to see the adoption rates of women. Now we can hypothesize why that's the case. But regardless of the reason, it's been a really interesting kind of surprising topic to see the popularity of sports gambling with women.

BetArizona.com: How important will sports betting be in driving revenue from tax dollars to the state between now and the Super Bowl in February?

McIntosh: We will see an influx without a doubt. It will be a lucrative one. But it’s interesting because that's going to be predicated on who's in the big game itself. And another component will be whether their state has legal gambling.

So, for example, California still hasn't legalized online sports gaming, and the Rams are the defending champs. So that's a huge domino that has still yet to fall. If the participants do not have legalized gaming, then we'll see a little bit more impact than if they do.

BetArizona.com: How would you describe the first year of sports betting? Has it been a success story when it comes to tax revenue, tax dollars and overall money that has been raked in through wagering in your opinion?

McIntosh: I think I’d give it a qualified yes, right? We can reference the numbers highlighting the revenue again. But I think there's another piece that doesn't always get talked about when we focus on the dollars and cents bottom line numbers. And that's the social impact of gaming.

FanDuel and DraftKings aren't local companies. So, there could easily be an argument that dollars are not being reinvested in Arizona, in the same way if more money went to local tribal affiliates. Now, some of this is offset by the tax revenue, certainly. But gaming has historically had a stigma associated with it. And I don't know if we fully appreciate all the impacts and how they can disproportionately impact some communities more than others when looking solely at tax revenues.

BetArizona.com: Can Arizona sports betting be a model for other states, such as California, that have not implemented any kind of sports betting yet?

McIntosh: So, I think the answer is yes and no.The licensing model that we have here would be a little bit more controversial in other states due to local politics. The model here is that the sports teams like the Suns, the Cardinals, the Mercury, etc., they get the licenses, and they make the decisions on who to work with. But if we're talking about just adoption, from a consumer point of view, with the adoption of online and in app betting, I think the answer is definitively yes.

BetArizona.com: How has the implementation of sports betting impacted the ability of the state to keep sports betting dollars here?

McIntosh: A percentage of that economy has always existed, it was just being done in other places, sometimes illegally, and there were no taxes being taken on it. The money into the state has grown without question, but it will take us a few more years to see if it has a large impact on the money spent in Arizona versus California or Las Vegas.

BetArizona.com: What’s your parting shot for readers about the opening year of sports betting in Arizona?

McIntosh: I've often joked with students and with other reporters that sports betting isn't going to save Social Security. We often hear these huge handle numbers that get reported. But if we look solely at the tax revenues, while not small — $16 million is not nothing — these are not that big when compared to the budget of a state like Arizona, which is roughly $13-to-$14 billion. So, I'd say enjoy sports betting, but also go to a local restaurant from time to time to help keep your communities healthy. And enjoy it while it's here.

quote

Author

Christopher Boan

Christopher Boan is the lead writer at BetArizona.com after covering sports and sports betting in Arizona for more than seven years, including stops at ArizonaSports.com, the Tucson Weekly and the Green Valley News. He is here to help you choose the best Arizona sportsbook for you.

Cited by leading media organizations, such as: