How much revenue could Florida sports betting generate for operators and the state?
The fate of legal sports betting in Florida is up in the air in 2023. Not long ago it appeared as though Florida was about to join the rapidly growing number of sports betting states. In fact, there was even a short period in November 2021 when Florida’s first online sportsbook launched. However, the app went offline after just a few weeks because a federal judge invalidated the gaming compact that legalized it. In June 2023, the DC Court of Appeals overturned that decision, allowing the terms of the 2021 Seminole-Florida gambling compact to go into place. Betting could resume as early as the beginning of the 2023 NFL season.
Sports betting’s brief moment in the Sunshine State nonetheless helped indicate how much money it could potentially generate. Sports betting may well return to Florida in August. If it does, Florida could represent one of the country’s largest sports betting markets.
A new tribal-state compact published, then vacated
After Gov. Ron DeSantis and the Seminole Tribe of Florida successfully negotiated a new tribal-state compact in the spring of 2021, Florida lawmakers made adjustments and voted to approve it in May. The new compact expanded what types of gambling the Seminole Tribe could offer in its Florida casinos. It also authorized the tribe to exclusively operate retail sportsbooks and online sports betting apps.
The tribe owns and operates six casinos in the state, including luxury properties in Tampa and Hollywood. Both sport the Hard Rock logo, which was to serve as the primary brand for Florida sports betting. Additional operators seeking to participate could also do so in direct partnership with the tribe under shared branding on the Hard Rock Digital platform.
In August 2021, the US Department of the Interior’s Bureau of Indian Affairs made the interesting decision to neither approve nor deny the new compact, and by default it was published in the Federal Register. Meanwhile owners of pari-mutuel properties in the state sued the state and the federal government. They claimed the new compact violated the Indian Gaming Regulatory Act (IGRA) by allowing the Seminole Tribe to offer gambling outside of its lands. In November 2021, a federal judge ruled the compact was indeed in violation of IGRA, thereby vacating the new compact.
It was during that brief period before the ruling the Seminoles launched their Hard Rock Bet app, although soon afterwards the tribe took it offline.
The federal government appealed the ruling, and it was overturned. The new compact and legal sports betting will be in play once more.
Taxes and fees for Florida sports betting
Looking at how the compact structured legalized sports betting, how much money could doing so provide the state of Florida?
Given their tribal sovereignty, the Seminoles are exempt from state licensing fees and taxes on their gambling activities. According to the new compact, pari-mutuels could offer brick-and-mortar sports betting, but only if they did so as a licensed vendor of the tribe. The deal gave the tribe exclusivity over the online sports betting market.
If a pari-mutuel partnered with the tribe to offer sports betting, they would have been able to keep 60% of the revenue generated while sending the rest back to the tribe.
The new compact required the tribe to return 13.75% of revenue accumulated from sports betting apps to the state. The tribe would further have given the state 10% of revenue generated from retail sportsbooks.
The new compact had authorized other forms of gambling as well including legalizing craps and roulette in the state, which would have added still more revenue. Officials estimated the total fiscal impact of the new agreement would have approached $500 million annually for the state.
One state official believes the compact will eventually generate $1 billion annually.
It’s unclear how much of that increase from the current levels would be from sports betting. Craps and roulette would add considerable revenue to the Seminole Tribe’s balance sheet.
How much revenue will Florida sports betting generate?
Here we must speculate as well. Since we have parameters set by the model of legal sports betting established by the new compact, let’s start there.
Under those terms, sports wagering in Florida could reach $8 billion to $12 billion annually. A total of $10 billion would seemingly represent a good target by the third year of operation. Those bets could yield as much as $1 billion in annual revenue for the tribe and its partners. With an effective tax rate of around 12.5%, the state would be in line to collect about $125 million per year from sports betting.
These projections assume that the market would materialize just as the legislation and compact prescribe. That would mean retail and statewide online betting would be conducted through the Seminole and Hard Rock with support from pari-mutuels and third-party brands. The projections also assume some limited competition from external brands which might be willing to operate at break-even (or worse) for the opportunity to participate.
Under this set of assumptions, Florida could eventually challenge leader New York as one of the nation’s largest regulated sports betting markets. Under such a model Florida would also likely surpass New Jersey and other states.
The forecast reflects a good-but-not-great framework put in place out of expedience and legal necessity, suppressing some of the benefits of online betting by the lack of true competition. Meanwhile an open market with participation from the country’s largest brands would double (or perhaps triple) the expected performance.
Considering revenue from different sports betting models in Florida
There is still an, albeit unlikely chance, that non-Seminole entities operate online sportsbooks in Florida. In 2022, FanDuel and DraftKings backed a ballot initiative that would allow online sports betting companies to operate in Florida. The initiative didn’t even get enough signatures to get on the ballot, but those companies could try again in 2024, although as of August 2023 there haven’t been any efforts.
If Florida sports betting came via the ballot initiative, most industry analysts believe the total handle and revenue would be more than double that of a Seminole-only market.
It remains to be seen if and when legal sports betting launches in earnest in Florida, as well as what shape sports betting will take. In any case, there remains a currently untapped sports betting market in Florida that could prove especially fruitful should it ever arrive.