In August 2019, Oregon made a significant bet on its future by legalizing sports betting, becoming one of the first states in the U.S. to do so following the Supreme Court’s landmark decision.
This strategic move aimed to generate a new stream of tax revenue while offering residents and visitors alike an engaging form of entertainment. The Beaver State was not new to the concept of sports wagering, having previously offered a form of sports betting through the Oregon Lottery’s Sports Action game until 2007.
The reintroduction of legal sports betting in Oregon was met with both enthusiasm and skepticism. Proponents highlighted the potential for economic benefit and the allure of tapping into an already vibrant sports culture. Critics, however, raised concerns about the societal impact and the challenges of establishing effective regulations.
As we now look at the industry four years post-legalization, the Scoreboard app – the initial platform introduced by the Oregon Lottery – has since passed the baton to DraftKings Sportsbook.
Considered one of the best betting sites in the country, according to popular sportsbook comparison site MyBettingSites’ review of DraftKings Sportsbook, the app offers Oregonians some of the most extensive betting markets in the country. This transition reflects the state’s evolving approach to sports betting as it adapts to the preferences of bettors and the competitive market landscape.
As we assess the state’s progress, it’s important to consider not just the raw numbers but also the context and nuances behind them. How has Oregon’s economy been influenced by the advent of legal sports betting? What promises have been fulfilled, and what lessons have been learned?
Analyzing the Economic Impact: Handle and Tax Revenue
Oregon’s foray into legal sports betting has seen a steady increase in its monthly handle, starting from $5.6 million in October 2019 to reaching peaks of over $60 million per month in 2023.
Despite this growth, Oregon’s sports betting numbers have remained modest compared to smaller states, likely due to the limited betting operator options within the state compared to the multiple betting operators offered by most other legal states.
Year-on-year, the total betting handle and revenue have climbed, showcasing a positive trend. In 2020, the state saw $218 million in bets, with a hold percentage slightly above 9%, resulting in $20 million in revenue. By 2022, the handle nearly doubled to $497.5 million, and the revenue grew proportionally to $49.52 million, maintaining a consistent hold percentage of around 9.1%. This hold percentage indicates a healthy profit margin for the state’s sports betting operations.
These figures are significant, considering Oregon’s sports betting market is not as saturated as other states, running primarily through a single operator rather than multiple betting operators. This monopoly could explain why, despite a population of over four million, the betting numbers have not scaled as aggressively as in other regions. The data suggests a potential untapped market that could be leveraged with increased competition and more betting options for consumers.
In the next section, we will delve into how the state utilizes the tax revenue generated from sports betting, which is crucial for understanding the full impact of this industry on Oregon’s economy.
The Allocation of Sports Betting Tax Revenue
When Oregon voters opted to legalize sports betting, they anticipated the state would see financial benefits similar to the Oregon Lottery, which has been contributing to various state programs for years. However, the specifics of how sports betting tax revenue is allocated can be less transparent than other forms of state revenue.
For the fiscal year 2021, the Oregon Lottery reported contributions of over $502 million to state and local programs from its various activities, including sports betting. While Oregon does not currently provide detailed figures for state tax revenues collected specifically from sports betting, the general allocation of lottery funds gives us an indication of where sports betting tax revenue may be directed.
The Oregon Lottery’s profits have historically been distributed to support public schools, job creation, state parks, natural resources, veteran services, and Outdoor School programs.
As the sports betting industry continues to mature in Oregon, taxpayers should demand further transparency and detail in revenue allocation, offering clearer insights into the specific benefits realized by the state from this sector.
Problem Gambling in Oregon Post-Legalization
The legalization of sports betting in Oregon has brought with it not only economic benefits but also the responsibility to mitigate potential social costs, such as problem gambling. The state has a long-standing commitment to addressing the risks associated with gambling, a commitment that has continued and evolved with the advent of legalized sports betting.
In Oregon, it’s estimated that 2.6 percent of the adult population experiences moderate to serious problems with gambling. This translates to approximately 84,000 adults and adolescents meeting the clinical criteria for a gambling disorder.
While these figures offer a snapshot of the problem, there isn’t clear data available indicating a significant rise in problem gambling since the legalization of sports betting in 2019. However, the state has been proactive in implementing measures to address the issue.
State Efforts and Funding
Oregon’s model for addressing problem gambling is comprehensive, taking into account biological, behavioral, economic, cultural, and policy elements that influence gambling and health. The state’s approach appreciates the complexity of gambling, striving to minimize its negative impacts while recognizing gambling’s availability, cultural acceptance, and economic appeal.
The Oregon Health Authority (OHA) has been at the forefront of these efforts, administering approximately $7.5 million annually for prevention and treatment programs across the state’s counties, funded by 1 percent of Oregon Lottery and sports betting revenues. This funding supports a wide range of services, from counseling and treatment to educational programs aimed at preventing problem gambling before it starts.
Looking to the future
As we reflect on the four-year mark of legalized sports betting in Oregon, the experiment appears to have yielded a positive trajectory. The economic benefits are tangible, with significant increases in the betting handle and tax revenue contributing to the state’s public services and infrastructure. Yet, there is a consensus that Oregon could amplify these successes by fostering a more competitive market rather than maintaining what effectively has been a monopoly.
Despite these considerations, the prevailing trends are encouraging. Oregon’s prudent measures in addressing problem gambling and its ongoing efforts to optimize sports betting regulations suggest a forward momentum. The state’s approach has been measured and responsible, setting a foundation for continued success and improvement in the years to come. The journey has been a learning curve, and Oregon seems poised to capitalize on its experiences, ensuring that sports betting remains a beneficial and sustainable component of its economy and community welfare.
