State gaming revenues surge, however break up is evolving

Gambling is the fourth-largest supply of state tax income, however a brand new report launched Tuesday cautioned that the gaming panorama could possibly be altering in ways in which cut back the advantages the state sees from the exercise.

The Massachusetts Budget and Policy Center published a paper Tuesday inspecting how the state collects and spends playing income. Like analysis from the UMass Donahue Institute this summer, MassBudget identified that on line casino revenues have been primarily stagnant for the reason that introduction of authorized sports activities betting. That pattern may alter the stability between what the report calls “the harms wrought by the gambling industry and the public benefits made possible by its revenue” if on-line sports activities betting takes the place of on line casino patronage or cannibalizes on line casino income.

Rep. Carole Fiola, who was a part of a panel dialogue on MassBudget’s analysis, stated new report comes at a crucial time: as lawmakers start to mull one other proposed growth of authorized playing in Massachusetts.

“There are several bills in front of us right now regarding igaming, and I think that is what is prompting this more extensive discussion,” Fiola, a Fall River Democrat who this session took over as chair of the Economic Development and Emerging Technologies Committee, stated. “And it should, it should.”

Last month, Fiola’s committee was despatched a invoice (H 4431) from Rep. David Muradian that will legalize on-line on line casino playing — digital slot machines, on-line blackjack tables, and extra — and make the brand new licenses obtainable to the casinos already working in Massachusetts. Plainridge Park Casino in Plainville, MGM Springfield and Encore Boston Harbor in Everett would every be capable of launch three on-line gaming manufacturers or “skins.”

The Grafton Republican filed the invoice Jan. 16, nevertheless it wasn’t referred to any committee till Aug. 18 and has not but been scheduled for its listening to. And although Muradian is listed as the one sponsor, the concept has attracted a lot of consideration — his invoice sits atop the “most popular bills” itemizing on the Legislature’s web site.

“The operation of internet wagering in conjunction with brick-and-mortar casinos serves to protect, preserve, promote, and enhance the tourism industry of the commonwealth as well as the general fiscal well-being of the commonwealth and its subdivisions,” Muradian’s laws declares in a preamble.

Muradian’s invoice proposes that the state would tax on-line on line casino operators at a charge of 15%, equal to the tax charge on on-line sports activities wagering operators.

Sports betting revenues are topic to a decrease tax charge than on line casino gaming revenues are — 15% for in-person bets and 20% for cell bets, versus a 25% tax on on line casino income and a 49% tax on slot facility income. Researchers at each MassBudget and the Donahue Institute have warned that the rising pattern of sports activities betting supplanting on line casino gaming may finally spell bother for a state authorities that depends on playing tax revenues.

“If sports betting is substituting for casino betting and profits are taxed at lower rates then either an ever-expanding pool of bettors must lose money betting on online sports or revenues will flatten,” MassBudget’s report declares. “In other words, if somebody wagers $200 on the Celtics instead of losing that sum playing slots, the Commonwealth receives $30 or $40 in revenue instead of $50 at a resort casino, or $98 at the slot parlor. Put differently, the sports betting companies would need to extract a lot more betting losses from Massachusetts residents to support the same amount of public investment by the Commonwealth.”

Casinos, the Lottery, and controlled sports activities betting collectively generated greater than $1.5 billion in state income in fiscal 12 months 2025 — greater than what the state took in from the fuel tax ($742 million), the property tax ($517 million) cigarettes ($262 million) or alcohol ($98 million), in response to MassBudget. Only the state earnings tax ($26.6 billion), gross sales tax ($9.6 billion) and taxes on companies ($4.1 billion) introduced in additional to state coffers.

But as a share of the state funds, playing income has declined over the past 25 years, the report stated. In fiscal 2025, playing revenues represented 2.23% of the state funds. That was down from 2.48% in fiscal 2024 and “a considerably smaller share of the state budget” than the Mass. Lottery coated by itself in 2002, 3.71%, in response to the report.

“Impressively large as the Lottery may be, its growth has slowed considerably in recent decades. Adjusting for inflation, the value of state revenue generated by the Lottery peaked in 2002 and has fallen by a third since,” MassBudget stated.

The House and Senate licensed on-line Lottery gross sales within the fiscal 12 months 2025 funds that Gov. Maura Healey signed final summer season. The Lottery’s long-sought response to the introduction of on line casino playing, each day fantasy sports activities and sports activities betting is predicted to launch someday subsequent summer season.

Treasurer Deborah Goldberg has stated she expects greater than $70 million in web revenue from on-line gross sales in 12 months one, greater than $180 million by 12 months three, greater than $230 million in 12 months 5, and nearly $360 million in 12 months 10.

MassBudget’s report recommends state lawmakers “pursue opportunities to increase public revenue without intensifying gambling harm, and to make the extraction of gambling profits less harmful.” The first method the report suggests doing so is by elevating the taxes and charges on playing corporations already licensed to function right here.

“These companies are given select access to a Massachusetts population with the highest personal income per capita in the 50 states. The industry has seen continuous years of record profits. The division of gambling profits between the industry and the Commonwealth is set by law and changing it is a legitimate way to raise revenue without increasing gambling harms,” the report stated.

One method of doing that with out altering the statutory tax charge for any kind of playing could be to extend the annual per-slot-machine price paid by on line casino operators from its present $600 per machine charge. MassBudget stated the 2011 expanded gaming regulation permits the price to be raised on the charge of inflation beginning 5 years after the preliminary award of on line casino licenses (which occurred in 2014), however the state has not carried out so.

That price would rise to $805 per slot machine subsequent July if adjusted for inflation, MassBudget stated.