February Sports Betting Index (SBI)

In the chart below, we present our RubinBrown Sports Betting Index (SBI). The SBI is based on our proprietary index of the leading sports betting states in the U.S. To continue to best reflect current market conditions, we’ll occasionally adjust the components of the index. To better compare competitive conditions, our index numbers focus in on a group of mature, competitive states. Therefore, a state with an index score of 1.15 had a raw index score of 15% greater than the average, while a 0.90 index score shows a 10% lower than average result.

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Super Bowl Sparks Mixed Betting Fortunes Across States

The Super Bowl closed out the NFL betting season—and host state Louisiana saw a notable surge in sports betting activity as the state topped our Index with a robust 1.51 score. Louisiana was the only state reporting an increase in online handle compared to January. By our team’s estimates, this surge generated over $1 million in excess sports betting GGR tax revenue for the state.

As might have been expected, Kansas bettors didn’t fare well. Kansas sportsbooks saw a record-setting 16.2% hold on $34.98 million in wagers for the month, pushing both the total handle and hold percentage to all-time highs for the state. Kansas’ retail sportsbooks saw $2.16 million in revenue from $6.6 million in bets, achieving a 32.7% hold. A big win for Kansas sports betting operators before they begin sharing their action with Missouri sports books.

Meanwhile, Pennsylvania bettors came out on top. Sportsbooks in the state recorded a 4.5% hold—the lowest since September 2020—on $756 million in handle, more than triple Kansas' volume. A deeper dive into the Pennsylvania data reveals that retail sports books posted a combined loss of $2.9 million on $30.2 million in wagers, for a hold of -9.6%.

These outcomes illustrate the strategic advantage enjoyed by national sportsbook operators. Multi-state presence enables them to manage exposure to regionally skewed betting outcomes, smoothing volatility across their operations and reducing their risk from “player-friendly” results.

Categorizing Sports Bets as Investment Products: The Tax Implications

Building on last month’s discussion of sports prediction markets and the emergence of players like Kalshi and Crypto.com, the RubinBrown team has been closely examining the potential tax and revenue implications of this evolving landscape. Our analysis suggests that the implications are broader than many have anticipated or discussed.

Categorizing event market activity as investment products, rather than sports betting, would result in significant tax impacts. Under this classification, event market activity would be treated similarly to commodities trading. Some impacts we foresee:

Reclassification impacts tax reporting for individuals:

• Form 1099-B to be issued for event market participants

• All gains and losses are reported, not just wins over a certain threshold as seen with W2Gs

• These impact federal and some state individual income tax liabilities  

Tax implications may include:

• Reduction in state gaming taxes collected  from individuals

• Deductibility of some losses by patrons on their individual income tax filings 

• Lower sports betting excise tax collected  by the federal government

• These would likely lead to less tax being collected overall

Not all activity will shift to event markets, and there could be some offsetting positive tax impacts from activity moving from black or grey markets to regulated event markets over time. Having patrons take their chances against an operator shifting to patrons competing amongst themselves in an exchange environment has far-reaching consequences for the industry, with taxes just being one of the considerations. And we also must consider that taxes evolve, and there may be tax changes implemented by the states impacted and the federal government as well.
 
Contact us to learn more about our Gaming Tax practice and other specialty advisory practices within our dedicated Gaming team at RubinBrown. 

Published: 04/23/2025

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