Georgia Sports Betting Revenue – Market Forecast and Taxes

Georgia lawmakers continue to propose and discuss different scenarios by which to introduce legal sports betting in the state. The most recent legislation has focused primarily on Georgia legalizing online sports betting only. Such a plan makes sense given the lack of casinos or other retail gambling venues in the state.

A major factor influencing the debate is the potential tax revenue legal sports betting might bring to Georgia. How much revenue might that be? There are many factors to consider, but we are forecasting a comparatively impressive total for the state.

What are lawmakers saying about Georgia sports betting revenue?

When thinking about how much revenue sports betting could generate for Georgia, we want to focus on a couple of key numbers:

  • The handle — i.e., the amount of money people wager.
  • The hold — i.e., the amount sportsbooks retain after paying off winning bets.

The hold generally works out to be a relatively small percentage of the handle. That percentage can vary considerably, affected in part by how the games actually go. After all, sometimes the house wins a lot, and other times not so much. The sportsbook can even lose money on a given day or short period, although generally, it will come out ahead over the long term.

Even though the hold percentage varies, for our purposes we can point to the national average of about 7.5% as a guide. Thus if the handle is $1 billion, we could estimate the hold at about $75 million. Then from that number, we can look at the particular tax rate to estimate how much revenue would go to the state.

Sports betting proponents offer revenue estimates

Sen. Jeff Mullis is the chief sponsor of SB 142, a sports betting bill introduced in early 2021. At a committee hearing to discuss his legislation, Mullis estimated Georgians spent $4.8 billion a year illegally wagering on sports. 

In fact, as discussed below, should Georgia legalize sports betting, it is reasonable to expect Georgians would wager even more than that each year, perhaps a lot more. In any case, if they legally bet that same $4.8 billion each year on sports, that would suggest a gross revenue total of approximately $360 million.

Meanwhile, in the House, Rep. Ron Stephens introduced HB 86, another sports betting bill. In February 2021, Stephens reported during a committee hearing that “it was estimated that sports betting could generate $433 million in gross revenue” (emphasis added). 

The Senate bill passed, but the House bill stalled in March 2021. However, legislation could still be reconsidered going forward. 

Sports betting revenue would help fund Georgia education

Chances are the Georgia Lottery Corp. will act as the regulatory body overseeing legal sports betting. As is true of lottery revenue, a portion of sports betting revenue will go toward funding education programs in Georgia. 

Specifically, money will go to the HOPE Scholarship program that provides financial assistance to Georgia college students and the Georgia Pre-K Program. Proponents of legalizing sports betting in Georgia often speak of how much benefit doing so will bring to these educational programs. 

After going through a few adjustments, the Senate and House bills from early 2021 both settled on a 20% tax rate on gross revenue. Looking at the above estimates, that would suggest anywhere from $70 million to $90 million could go to help fund education each year. 

However, by looking at comparable states with legal sports betting, we’re thinking Georgia could perhaps do even better than that.

Georgia sports betting revenue vs. Michigan/ Ohio sports betting

In terms of population, Georgia has just over 10.5 million residents. That puts Georgia in between Ohio (a bit larger) and Michigan (a bit smaller), two states that have recently legalized sports betting. 

Michigan opened its first retail sportsbooks in the state’s casinos in 2020. Then in January 2021, the state launched legal online gambling, including sports betting. Michigan sports bettors now have more than a dozen sportsbook apps from which to choose.

Online sports betting has proven popular in Michigan, accounting for 90% to 95% of the sports betting action versus retail. That’s not unusual, as most states with both retail and online sports betting find bettors overwhelmingly favor the online option. During sports betting’s first year in Michigan, bettors wagered nearly $4 billion, mostly online. Meanwhile, sports betting revenue in Michigan approached the $300 million mark for the year. 

Truth be told, it wasn’t until the latter part of 2021 that Michigan’s sports betting handle and hold began to take off. Thus, for 2022, we’re projecting a sports betting handle of about $8 billion for Michigan, which could mean $600 million in revenue.

Ohio has legalized sports betting, but sportsbooks have yet to launch in the state. When it does, we’re estimating a range of $9 billion to $12 billion in sports betting handle for the more populous state. That may result in revenue totaling $675 million to $900 million.

Taking those two estimates as a starting point, we might place Georgia in between as a state that could potentially generate sports betting handle of $10 billion per year. 

That might be a bit high, though, requiring one of the highest handle per capita rates in the country to achieve. Also, Georgia does not have the land-based gambling industry that both Michigan and Ohio have, which should logically lower our estimate. Also worth considering is the fact that Georgia may legalize sports betting but disallow wagering on college sports. That, too, would lower the overall handle. 

Therefore, something in the $8 billion to $9 billion range might be more realistic.

That would still mean sports betting revenue ranging from $600 million to $675 million per year in Georgia, 20% of which would go toward funding educational programs (according to legislation currently under consideration).

Georgia sports betting revenue vs. Tennessee sports betting

What about Georgia’s neighbor to the north, Tennessee? Even though Tennessee has only about two-thirds the population of Georgia, it might be a good comparison given that it only allows online sports betting, and that’s what GA lawmakers are considering. 

Like Georgia, Tennessee has no casinos and thus no obvious locations for retail sportsbooks. The state legalized sports betting in 2019 and first launched a year later. Today, there are nine online sportsbooks up and running in TN, with more potentially on the way.

Tennesseans bet just over $2.73 billion on sports during 2021, a total that will likely increase in 2022 now that the industry has begun to mature and more books are active. Tennessee has a population of just under 7 million. From that, we might initially estimate something approaching $5 billion a year for annual Georgia sports betting handle.

In this case, we might increase our estimate based on other external factors. Georgia has more professional sports teams and major sporting events than does Tennessee. Georgia also has a larger tourism industry and has other advantages that could favorably impact a sports betting market.

Thus, we might estimate a $7 billion to $8 billion range for annual sports betting handle for Georgia as a projected estimate. Again, that could mean $525 million to $600 million in annual revenue, of which 20% could go toward GA educational programs.

Georgia sports betting revenue vs. Florida sports betting

We might also consider the potential impact of Florida should the state’s many interested parties settle their differences and manage to launch legal sports betting in the Sunshine State.

At present, Georgia wouldn’t necessarily face a lot of competition from bordering states when it comes to sports betting. Neither South Carolina nor Alabama allows sports betting. As noted, online sports betting is legal in Tennessee. North Carolina’s two Cherokee casinos in the western part of the state also have legal retail sportsbooks. That’s all NC offers right now, although there, too, legislation to expand sports betting is under consideration. 

On the whole, though, Georgia wouldn’t necessarily have much competition from surrounding states. That said, if Florida were to legalize sports betting, that could potentially have some influence on Georgia’s bottom line. 

While most of Florida’s gambling venues are in the southern part of the state, the Jacksonville area and panhandle host sites, as well. Online sports betting is on the table in Florida, as well, which would mean access from anywhere in the state. 

Without any concrete plan for Florida sports betting, we won’t factor that into our current calculations for Georgia. But we’ll keep in mind the fact that it could potentially introduce a significant sports betting neighbor. 

Other factors affecting Georgia sports betting revenue

There are many factors to consider that could increase or decrease Georgia sports betting revenue. 

As noted, the exclusion of college sports from the available betting markets could bring down the total. The number of sportsbook apps available could affect the bottom line, as well. Current legislation calls for no fewer than six online sportsbooks with no upper limit, meaning there could be six or 12 or even more. 

How the law is written and how Georgia regulators establish rules for sports betting will impact its success, as well, either positively or negatively.

With those caveats in mind, we’ll estimate that once Georgia legalizes sports betting, look for a handle in the $8 billion range annually, which would potentially yield $600 million in annual revenue. With a proposed tax of 20%, that would mean $120 million for Georgia education.