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Where Does Texas Stand in the Sprawling US iGaming Industry?

Across the country, the iGaming industry has taken off in a big way. Spanning online sports betting and online casino gaming, the digital space of gambling was given the green light by the federal government just over five years ago now, and several states have decided to permit the activities under their own set of rules. When the Professional and Amateur Sports Provision Act 1992 was deemed unconstitutional by way of a 7-2 vote at the Supreme Court in 2018, some states went all-in swiftly.

Joining Nevada as states with legalized gambling were Delaware and New Jersey, and as their regulatory bodies declared aspects like handle, profits, and tax revenue, more states decided to weigh in. The repeal of the 1992 law has seen over 30 states at least launch a sports betting market. Some others have legislation in place, but others aren’t moving. One of those non-movers is Texas.

Now, that’s not to say that there aren’t gambling options in Texas – Lone Star Park is only a ten-minute drive away from Irving, for example – but since the repeal of PASPA opened the door to online options, Texas hasn’t made any official ground towards a regulated market. Still, this year, with the industry going from strength to strength elsewhere, there may have been some ground made up in the Texas House, which may lead to changes in the near future.

Climbing towards a $7.6 billion industry

While Nevada and its most famous city, Las Vegas, have long seen revenues in the millions from gambling, across much of the rest of the country, the largest cohort of gambling belonged to the Tribal casino businesses and companies. There were a few other enclaves offering the likes of casino gaming, like the riverboat casinos on the Mississippi River, but for the most part, it was Las Vegas, Tribal casinos, or Atlantic City. Now, with the infusion of online-based gambling options, new and accessible ways to bet and play have risen to the fore.

By 2021, a mere three years after states were permitted to start introducing legal frameworks for iGaming, the US market was already worth over $2.6 billion. From there, only hefty growth has been forecast. Revenues in excess of $7.6 billion for the industry have been tipped by the year 2028, marking a compound annual growth rate of 16.4 percent from those 2021 reports. It’s quite staggering for an industry that, in the US, is still very young. Of course, it has been buoyed by an influx of seasoned brands from the likes of Europe, the Las Vegas elite, and the companies that worked in the gambling sector of daily fantasy sports.

Now, 30 states and the District of Columbia all play host to a legalized sports betting market and have established their own regulatory bodies to oversee the sector. Some of those states have also introduced laws that permit online gambling activities like table games, poker, live games, and slots. You can also see the likes of Alaska, Massachusetts, Oklahoma, Georgia, Kansas, and Missouri moving towards iGaming legislation if the proposals succeed in voter referendums. So, a lot is already in place, and more states look to join the industry soon, giving credence to the predictions for massive growth in iGaming over the next five years.

However, just being available in states doesn’t automatically make digital gaming solutions popular. For a healthy market in the US, there needs to be competition under tight regulation. For the most part, it seems that states have laid out some very strong legal frameworks and given a great deal of authority to their established regulatory and licensing bodies. An important part of this has been to permit several brands and platforms to enter the market and compete to be the best in the eyes of potential players.

Across the US, the competition is fierce between betting and gaming brands. Drawing from the tried-and-trusted methods used in Europe, US platforms quickly had to jump on the welcome offers bandwagon once international labels introduced themselves with such promotions. However, the level of competition in online casino gaming alone has already led to much more advanced and user-friendly offers. For example, among the top free spins offers available at the time of writing, not only does one offer 50 bonus spins from a $10 deposit, but players also get up to $1,000 return from net losses in their first 24 hours as an account holder.

We can talk about the market value to show how quickly iGaming has caught on and how competition is making for an engaging and player-focused industry, but what’s important to note is that regulated markets are also heavily taxed. Those states that are open to iGaming and regulate the industry get to dictate the amount that online sportsbooks and casinos pay in tax as well as where those funds go. Usually, this is all laid out in proposed bills and tends to be the major selling point of legalization and market regulation.

Most states funnel the tax income from gambling revenues to public programs, public services, the arts, education and economic development funds, and organizations that help with problem gambling. Some states like to really make the most of this power of taxation. In Delaware, where revenues hit $1.2 million at online casinos and $283,025 in sports betting, both online and retail providers are taxed 50 percent. The likes of Iowa are a bit more lenient at 6.75 percent, but others like New Hampshire like to tax more than half of sports betting revenues at 51 percent. In New York, it’s a ten percent tax on land-based sportsbooks, but 51 percent for online bookmakers.

Is Texas moving towards legalizing iGaming?

In Texas, residents are free to play lottery gambling games, frequent Tribal casinos operated by the local Native American tribes, and go to the racinos – the pari-mutuel horse racing venues with a selection of electronic gambling machines. Still, being such a hub for sports and entertainment, bodies within the industry and government have been trying to get the Lone Star State to legalize and regulate iGaming.

In February of this year, it was reported that sports team owners and casino operators were funneling millions of dollars into Texas politics to attempt to put to voters whether or not gambling should be legalized and several Las Vegas-style resorts should be erected in and around key cities. However, in May, two proposals that would introduce licenses for casino resorts and online sports betting didn’t quite make the cut.

Both fell narrowly short after receiving House approval, with the time crunch to get iGaming off the ground before the end of the legislative session ultimately deciding to keep the Lone Star gambling scene as it is for now. The legislation didn’t make it out of the chamber, but only by very narrow margins. Both the sports betting and casino proposals gained a majority of approvals, just not the two-thirds majority needed.

This has given hope to some representatives and other interested parties, with it being a sign of movement towards putting the proposals to a public vote. For most proponents of the bills, a focus is on ensuring that Texans who already partake in iGaming can do so in a safe and regulated space governed by the state. Furthermore, strong taxation could help to fund teachers and upgrade public services.

For now, Texas will not be changing its gambling laws. Neither online sports betting nor casino gaming are permitted, with only a select few venues within the state offering gambling as a legal activity. Still, some believe that there is some momentum towards at least putting the decision to the public.

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