Connecticut could evolve into a market that generates more than $1.5bn in annual sports wagers and more than $100m in operator revenue with online casinos capable of generating as much as $350m in gross gaming revenues annually, becoming a huge tax generator for the state.
“Connecticut is a relatively small state, but the market has a handful of attributes that should help it punch a bit above its weight,” said Eric Ramsey, analyst for the PlayUSA.com network, which includes PlayCT.com. “Geographically, the state is in a good place, with the potential to draw significant out-of-state business from New York and Massachusetts. And Connecticut features one of the highest median household incomes in the US. Both factors should help the market reach maturity relatively quickly.”
Gov. Ned Lamont, who negotiated the agreements with the Mashantucket Pequot and Mohegan tribes to amend gaming compacts, signed the bill that would legalise retail and mobile sports betting, online casinos, online poker rooms and iLotteries. Now the US Bureau of Indian Affairs will have to sign off on the compacts.
Once that happens, Connecticut will join more than two dozen states with legal sports betting in some form, and join New Jersey, Pennsylvania, Michigan, Delaware, and West Virginia as the only states with full-scale legal online casino gambling.
With a population of more than 3.5m people, Connecticut could produce more than $1.5bn in retail and online sports wagering by the market’s third year, according to PlayCT projections. Assuming a seven per cent hold, those wagers could produce more than $100m in operator revenue. With a hypothetical effective tax rate of around 25 per cent, more than $25m could be injected into state coffers annually.
Iowa may be Connecticut’s closest comparison among current legal sports betting markets. With some 400,000 fewer residents but with a more open market that fosters more consumer choice than Connecticut, the Hawkeye state has produced $572.9m in online and retail sports bets and $40.2m in gross operator revenue through the first four months of 2021.
“Connecticut will be a successful market, and likely a significant revenue driver for the state for years to come,” said Dustin Gouker, lead analyst at PlayUSA.com. “The state’s high median income and proximity to New York should be significant contributors to the market’s growth, particularly early on as New York makes its own push into the online sports betting market.”
Online casinos should be even more lucrative, capable of generating close to $350m in annual gross gaming revenue at maturity, according to PlayCT. If online casinos reach that mark, that would mean as much as $70m in annual tax revenue for the state.
The three largest iGaming markets — New Jersey, Pennsylvania, and Michigan — each generate close to $100m in operator revenue each month.
“Sports betting grabs more headlines, but in states where it is legal, iGaming has proven to be the far more reliable revenue generator,” Ramsey said. “Plus, history shows that a thriving full-scale online casino gaming market helps spur interest in online sports betting, making it the tide that lifts all boats. And there is no obvious reason that Connecticut won’t follow a similar pattern.”