Illegal Sports Betting in Massachusetts Unaffected by Legalization

Massachusetts was among the US states that legalized sports betting in 2022. After the legalization of the activity, the state launched its retail market at the end of January 2023, followed by an online betting market launch on March 10 of the same year.

Despite operating for more than a year, the market is yet to see a notable decrease in the number of bettors using the services of illegal or unlicensed operators. A new study pointed to data that showed that a significant proportion of the monthly bettors continue to engage in betting with illegal providers, despite Massachusetts legalizing the activity.

The study, titled “Gambling and Problem Gambling in Massachusetts: Results of Three Online Panel Surveys” was conducted by the UMass School of Public Health and Health Sciences. While the research focus was problem gambling, it uncovered an interesting pattern related to the behavior of bettors who continue to use illegal bookmakers.

The newly released study compared data from 2022 and 2023, uncovering a similar percentage of bettors continue to use unlicensed betting providers. For example, per the study, bettors who used any illegal sports betting provider in 2022 were 33.9%. In 2023, the percentage was relatively on par, considering the 31.9% result, despite the legalization and launch of legal mobile and retail betting.

Concerningly, more than half of the bettors in 2023 admitted to planning to use betting services even if Massachusetts had not legalized the activity. “Finally, in response to a question in the 2023 survey, 53.0% of monthly gamblers indicated that if Massachusetts had not legalized sports betting, they would have gambled on sports in other jurisdictions or online with an out-of-state operator,” explains the study.

Migration of Consumers Is a Lengthy Process

Currently, The Bay State taxes retail betting at 15%, while mobile betting is subject to a 20% tax rate. According to data released by the state’s gambling regulator, the Massachusetts Gaming Commission (MGC), since the legalization of mobile and retail betting through the end of July this year, the state has collected approximately $166.61 million in total taxes.

A majority of those taxes benefit the Massachusetts general fund, but proceeds also boost the gaming local aid fund, workforce investment trust fund and public health. A small percentage of the betting tax revenue helps the youth development and achievement fund.

“Taken together, these data suggest that there was not a substantial recapture of illegal sports betting revenues in Massachusetts between 2022 and 2023. However, as many jurisdictions internationally have found, it can take a substantial period of time for sports bettors to migrate fully from non-regulated to regulated providers,”

explains the new report

Despite the benefits of legal wagering in the form of tax revenue, the data from the recent report confirms that Massachusetts has yet to decrease its share of the illegal betting vertical. Still, researchers acknowledged that the migration from illegal to regulated providers, as observed in other jurisdictions, can be a lengthy process.

On the bright side, the percentage of bettors using any legal betting operator marked an increase in 2023. The survey reveals that in 2022, 86.5% of bettors used any legal sports betting provider and this figure increased to 93.2% last year.