- Sportsbooks in the United States could lose $2 billion in handle and nearly $200 million in revenue as a result of the COVID-19 pandemic.
- Local and state governments project to lose over $24 million in tax collections off this lost revenue.
- Even once the sports world is fully operational again, the behavior of bettors could be volatile and unpredictable.
LAS VEGAS – With so many sports organizations around the world suspending, delaying, or altogether canceling play due to the COVID-19 pandemic, sportsbooks in the United States stand to lose hundreds of millions of dollars in revenue.
All this lost revenue will have a cascading effect on local and state governments that rely on sports betting taxes to fund a sizable portion of their budgets.
The pool of available betting events is rapidly diminishing as more sports organizations around the world decide to shut their doors in fear over COVID-19. Many sportsbooks are remaining open and accepting futures bets still, but the financial losses are expected to be massive.
The biggest singular loss will likely be the NCAA Men’s Basketball Tournament, more commonly known as March Madness. For many sportsbooks, the first two rounds of the tournament represent the busiest single week of the entire year.
In Nevada in 2019, March posted the second-highest monthly handle and revenue totals, trailing only November.
Using a Legal Sports Betting projection model based on Nevada’s monthly revenue share averages, it is possible to come up with a detailed estimation of COVID-19’s financial impact on the nine states that report sports betting revenue.
How Much Will Sportsbooks Lose From COVID-19?
While some March events have already been played, those with the highest average betting action—NCAA basketball postseason games—have not.
In Nevada, the country’s most established sports betting market, March accounts for 11.22% of annual revenue. If we assume that rate is relatively standard, we can use current 2020 projections to infer how much money will likely be lost.
A conservative estimate would still have sportsbooks losing nearly $1.5 billion in handle and over $101 million in revenue. This would also result in $13.6 million in lost tax revenue for states.
The timeline for a potential return to normalcy is unclear. Some organizations have suspended play for only the next several weeks, while others have done so indefinitely or cancelled the remainder of their season entirely.
April accounts for a much more modest 6.17% of annual revenue in Nevada but if all sports were cancelled for the entire month, that would result in a loss of $1.14 billion in handle, $79.8 million in revenue and $10.7 million in taxes.
Even if play resumes in early-to-mid April, the behavior of fans and bettors will be difficult to predict. Fans could flock to sportsbooks in excitement, or they could stay home out of weariness or fear of contracting the virus.
Regardless of the specifics, the American sports betting industry stands to lose a staggering sum of money as a result of COVID-19.
With a dual background in English and sports performance and business analytics, Carter aims to write stories that both engage and inform the reader. He prides himself on his ability to interweave empirical data and traditional narrative storytelling. When he isn’t keeping readers up to date on the latest sports betting legal news, he’s banging his head against a wall regretting his decision to be a Tampa Bay Buccaneers fan.