CT Sports Betting & Online Gambling Revenue

Legal sports betting and online casino gambling are coming to Connecticut under new agreements that are pending federal approval between the state and its two Native American tribes.

This sweeping modernization of gambling will be achieved via updated compacts with the Mohegan and Mashantucket Pequot, which own co-exclusive rights to offer casino games in the state. Tribal permissions will be enhanced to include online gambling and omnichannel sports betting, making Connecticut one of only a handful of states that regulate both activities.

Gov. Ned Lamont negotiated and signed the new compacts, which now await final approval from the US Department of the Interior.

Taxes and fees for sports betting and iGaming

Connecticut will impose a fixed tax rate of 13.75% of gross sports betting revenue, putting it in the middle of the range among US states with legal wagering. This rate applies equally to both the tribes and the lottery, though the latter is apparently seeking to do better via its revenue-sharing agreement.

Taxes for online casino gaming are also moderate, starting at 18% for five years, then increasing to 20%. Such a stepped structure is unique to Connecticut, the result of a compromise over one of the final sticking points between the state and the tribes.

Given there is no formal licensing process for them, there are no fees attached to the three master licenses. The state instead collects from the rest of the supply chain.

  • Online gaming operator: $250,000 application; $100,000 renewal annually
  • Online gaming service provider: $2,000 annually
  • Sports wagering retailer: $20,000 annually

Operators will also reimburse the state for actual costs of regulation, including the hiring of 15-24 new full-time employees. These expenses could reach $3.3 million by 2023.

Last but certainly not least, the legislation allocates up to $2 million annually to support problem gambling treatment programs. The lottery will contribute $1 million of that, while the tribes will contribute $500,000 apiece.

How much revenue will CT sports betting generate?

The fiscal note attached to the bill projects as much as $24.8 million in annual tax revenue from CT sports betting by 2026. At the statutory rate of 13.75%, reaching that number would require operators to generate around $180 million in combined revenue annually.

PlayCT projections are not quite that optimistic considering the limitation on brands, the ban on in-state college betting, and the looming expansion in neighboring markets. We forecast upwards of $1.5 billion in annual handle at maturity, which could yield upwards of $120 million in gross revenue and $15 million in taxes.

As with most aspects of this expansion, the true result also depends on the exact implementation and the specific brands that participate, not just in Connecticut, but also in New York and Massachusetts. The lottery’s eventual choice of partner will also have a significant impact on the end result.

These projections do not consider revenue from the regulation of fantasy sports, which is also part of the expansion.

Expectations for CT online gambling revenue

The fiscal note projects as much as $28.1 million in annual tax revenue from CT online gambling by 2026. Here, PlayCT projections for iGaming revenue in Connecticut are considerably more optimistic.

Data from other states indicates that online casino gambling is a more potent and predictable driver of gaming revenue than sports betting, particularly when both are available in tandem. Our forecast envisions an iGaming industry capable of generating more than $300 million in annual revenue and $50 million in taxes.

Once again, all expectations hinge on the timing and composition of the industry from launch through the initial growth phase. These projections do not consider revenue from the lottery games like Keno, which are also part of the expansion.