California Sports Betting Revenue Estimates are Shocking

As the wait for California sports betting legalization continues, the discussion on its future has settled on two primary topics: The relationship between tribal nations and the best online sports betting sites in the United States, and how much the state stands to gain if they join 40 of its peers that have already green lit some form of wagering.

The first issue is continuously unfolding—and it informs the demand for California sports betting revenue estimates. And rest assured, those projections are going to shock you.

First thing’s first: Over the past year or so, it seems as if online sportsbooks and California tribal nations are on more stable footing. Sports betting operators are even going as far as saying they are prepared to partner with tribal nations rather than seek independent licenses. This is a stark departure from the contentious, and warring, campaigns both sides ran back in 2022.

With this dynamic thawing, perhaps even approaching enthusiastic collaboration, most now believe it is only a matter of time before sports betting in California receives the stamp of approval. Granted, this stance is also debatable. The relationship between tribes and sportsbooks may be peachy keen, but it has yet to result in joint legislation proposals. And this says nothing of that prospective collaboration making it through both the House of Representatives if and when it is formulated.

Still, while short-term optimism waxes and wanes, the long-term outlook tilts toward the rosy end of the spectrum. And that naturally leads to a larger interest in what the legalization of California sports betting will mean to the state’s tax revenue.

Spoiler alert: They mean a whole lot. Because they start with a “b”—for billions of dollars.

California Sports Betting Could be Worth $4 Billion Per year

You read the above line correctly. As Brian Joseph for Times of San Diego wrote earlier this year:

“California’s sports gaming market is universally regarded as a gold mine, with annual revenues conservatively projected at $3 billion if it can ever be legalized in the state. Even after the state’s bruising ballot box battle over sports gaming in 2022, the global gaming industry has long understood that sports gaming would eventually be legalized in California simply because the potential profits are too great.”

The above sentiment about The Golden State being a lucrative market is universal. Everyone still believes sports betting in California will be legalized because of the windfall it will deliver for sportsbooks and the state. The $3 billion sportsbook revenue projection, on the other hand, may actually be too conservative.

According to Tom White of Newport Beach Magazine, many experts believe California sports betting is a $4 billion per year venture. That is an absurdly high number at first glance. It even seems to be too true.

Which raises the question: Is it actually too good to consider accurate?

Is This California Estimate on Sports Betting for Real?

The market for sports betting in New York is the gold standard for these comps. They are currently the national leader in sports betting handle, sportsbook revenue and taxes extracted.

Through three calendar years of sports betting, The Empire State has topped out at $2.05 billion in sportsbook revenue. This is anywhere between two-thirds and one-half of what the aforementioned projections have for California.

The best way to use this as a baseline for The Golden State is to look at per capita profit for sportsbooks. This is essentially a number that shows how much sportsbooks generated in profit, after paying out winning wagers, relative to the total population, regardless of how many people partake in sports betting.

Now, the population in New York for the 2024 calendar year was 19.87 million, according to the United States Census Bureau. Weight that against the $2.05 billion revenue reported by sportsbooks, and you get a per-capita profit of $103.17.

Before we apply that to California sports betting projections, let’s go ahead and adjust for the median household income. The median mark for households in The Golden State this year is $50,251, according to World Population Review. For New York, this number clocks in at $42,397. Since California’s median household income is about 18.5 percent higher, we will tack that on to their projected per-capita revenue. So, an 18.5 percent increase of $103.17 comes to $122.26.

Multiply that number by California’s current population of 39.4 million people, and you get to…$4.8 billion in projected sports betting revenue for operators.

How Much Tax Revenue Can California Expect?

The above projections may wind up being too generous. California’s sports betting market may need to marinate before it expects to eclipse $4.8 billion in sportsbook revenue. This number is also based on a demographic that has access to online sports betting. We do not know for sure whether California will make mobile betting widely available. A lot rides on the relationship between tribal nations and sportsbook operators.

Still, if the actual result is anywhere close to that number, the state has billions of dollars at stake itself.

Many believe that California will assess a 50 percent tax rate to final gaming revenues. That is a high number, but it is not unprecedented. It’s right in line with the New York sports betting market.

Well, a 50 percent tax on $4.8 billion is…$2.4 billion per year. That is quite a bit of money. Even if it’s on the high end, it feels like a good ballpark figure. And it proves why, regardless of how long it takes, so many believe California sports betting isn’t a matter of if but when.

Take a look at this list of the top online sportsbooks so you can find one that works for all of your sports betting needs: