Arizona brings in $670,000 from gambling taxes in February

PHOENIX (AP) — Arizonans bet nearly $492 million on sporting events in February and won back all but $24 million of that money, a slight dip as pro football ended except for the Super Bowl on Feb. 13.

Tuesday’s report from the Arizona Department of Gaming on the sixth month of legalized sports betting showed sports books made $24.4 million in gross profits after federal tax. But that was before they gave away $17.6 million in free bets that are designed to get state residents in the habit of gambling under the new law Republican Gov. Doug Ducey signed last year.

That left $6.9 million in adjusted profits for the 18 professional sporting teams and tribes now running mobile or brick-and-mortar sport books. The state take was just $670,000 in taxes. The state levies an 8% tax on retail wagers and 10% on mobile app bets.

The free bets eating into the profit and the state’s tax haul will phase out over the next several years. They start at 20% of gross receipts in the first two years and then drop to 15% and then 10% before ending in the sixth year of legalized sports betting.

February’s numbers were slightly below January receipts of $563 million, profits of $19.6 million after free bets and state taxes of $1.9 million.

Department of Gaming Director Ted Vogt said in a statement that the slight drop in wagers compared to January was expected.

“Event wagering levels continue to indicate a strong market in Arizona,” Vogt said in a statement. “While there was a small decline in wagering activity, the state maintained a strong national presence in a traditionally slower month of sports wagering.”

The state also reported that fantasy sports betting, which was legalized under the 2021 legalization, brought in $1.7 million in entry fees in February and the eight operators made $160,000 in profits after paying out to winners. The state charges 5% in tax and netted just under $8,900.

That was a sizable drop from January, when $3.9 million in fantasy sports entry fees were paid. After payouts, companies made profits of $431,000. The state take in January was just over $21,000.

Fantasy sports betting launched in late August and full-on sports betting on Sept. 9.

Between the launch of sports betting and the end of the year, gamblers wagered more than $1.7 billion and the sports books made about $60 million in profit. That led to taxes paid to the state of $6.1 million.

The newly legalized sports betting was part of a deal negotiated by the governor’s office that allowed the state’s Native American tribes to get 10 of the available licenses and professional sports teams to get the other 10. Tribes also greatly expand the type of gambling they can offer at tribal casinos.

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