Sports Betting in Massachusetts: Legalization Fails to Curb Illegal Betting

In 2022, Massachusetts joined the list of U.S. states to legalize sports betting. By the end of January 2023, the state had launched its retail sports betting market, followed by the introduction of online betting on March 10 of the same year. Despite these developments, illegal sports betting remains prevalent. Many bettors continue to engage with unlicensed or illegal operators, indicating that legalization hasn’t significantly curbed this behavior.

A recent study conducted by the UMass School of Public Health and Health Sciences sheds light on this trend. Titled “Gambling and Problem Gambling in Massachusetts: Results of Three Online Panel Surveys,” the research primarily focused on problem gambling but uncovered a notable pattern of continued engagement with illegal bookmakers.

The survey compared data between 2022 and 2023, revealing that a significant portion of bettors still rely on unlicensed betting services. In 2022, 33.9% of bettors admitted to using illegal sports betting providers, and in 2023, the figure only slightly decreased to 31.9%, despite the legalization and availability of both retail and online betting options.

Interestingly, the study also highlighted that over half of the bettors in 2023 would have continued betting, even if sports betting had not been legalized in Massachusetts. Specifically, 53% of monthly gamblers in the 2023 survey expressed that they would have gambled on sports with out-of-state operators or in other jurisdictions had Massachusetts not legalized the practice.

there was an increase in the proportion of monthly gamblers in the online panels who had engaged in any legal sports betting between 2022 and 2023. There was no change in the proportion of monthly gamblers in the online panels who had engaged in any illegal sports betting between 2022 and 2023 and a decrease in the proportion of monthly gamblers who engaged only in illegal sports betting.

Transition to Legal Betting Takes Time

Massachusetts currently imposes a 15% tax on retail sports betting and a 20% tax on mobile betting. Since the legalization of these betting platforms, the state has collected approximately $166.61 million in taxes through the end of July 2023, according to data from the Massachusetts Gaming Commission (MGC). The majority of these funds contribute to the state’s general fund, while other portions are allocated to the gaming local aid fund, the workforce investment trust fund, and public health initiatives. A smaller portion of the tax revenue is used to support the youth development and achievement fund.

However, the recent report from the UMass study suggests that Massachusetts has yet to reclaim a substantial share of the illegal betting market. This is consistent with findings in other jurisdictions around the world, where the transition from non-regulated to regulated betting providers has been a slow and gradual process. Researchers acknowledge that it often takes time for bettors to fully migrate to legal operators, as illustrated in the new report.

Increased Use of Legal Operators

On a positive note, the data does show a gradual increase in the number of bettors using legal betting platforms in Massachusetts. In 2022, 86.5% of bettors reported using legal sports betting providers, and this figure rose to 93.2% in 2023. While illegal betting remains an issue, the uptick in the use of regulated services is a step in the right direction for the state.

Despite the benefits of legal sports betting, such as the significant tax revenue generated, the study indicates that illegal betting persists. The researchers emphasized that, while Massachusetts has not yet significantly reduced its share of illegal sports betting, other jurisdictions have experienced similar challenges, and the transition period could be lengthy.

Overall, while the legalization of sports betting in Massachusetts has brought in substantial tax revenue and led to an increase in legal betting activity, a significant portion of bettors continues to use illegal services. The findings from the UMass study suggest that it will take time for the state to fully recapture the illegal betting market, and Massachusetts will likely need to continue its efforts to encourage bettors to transition to legal operators.

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