The United States gambling industry has been thriving online lately. Forecasts indicate that the iGaming industry will be worth $10.98 billion by 2029. As the market continues to expand, burgeoning operators and iGaming entrepreneurs are seeking the most favorable states to launch their iGaming business ventures. This article breaks down the key factors to consider, comparing the most appropriate states to one another to find the most promising options. 

Key Considerations:

Naturally, tax rates and structures are the first and most obvious factors to consider for burgeoning iGaming entrepreneurs looking for a state to set up shop. The tax burden imposed on iGaming operators can significantly impact profitability. States with lower Gross Gaming Revenue tax (GGR) are more favorable. Equally important to tax, each state’s market potential is also vital to consider. Population size, income levels, and consumer interest in online gaming all affect the financial bottom line. States with large populations, high disposable incomes, and a keen demographic of gamblers are the ideal choices. Finally, the regulatory environment varies wildly between states, so it is important for operators to consider whether or not their business plan fits within the legal boundaries of their chosen state. 

For the purposes of this article, we will be examining the states where online casino gambling is fully legal and regulated. Of course, online casinos can be enjoyed from pretty much anywhere in the USA, especially via offshore sites and crypto casinos, that don’t fall under individual states’ usual gambling laws. Many of these also offer quick withdrawals if they use crypto, so you can have near-instant access to your winnings (source: instantcasinos.com). 

But as a base of operations for setting up an iGaming business, the choice is more limited. Here are the most promising choices:

New Jersey:

Regulated by: New Jersey Division of Gaming Enforcement  (NJDGE)

Gross Gaming Revenue Tax: 13%

As one of the pioneers of regulated online gambling in the US, New Jersey boasts a well-established market with a favorable regulatory environment. The Garden State’s large population, high income levels, and proximity to major metropolitan areas contribute to its strong market potential. The NJDGE has a reputation for fairness, transparency, and effective oversight, making it a desirable state for iGaming operators. 

Michigan:

Regulated by – Michigan Gaming Control Board (MGCB)

Gross Gaming Revenue Tax: 20 – 28%

Online casino gambling in the Great Lakes State was legalized in 2020, and since Michigan’s iGaming industry has gone from strength to strength. This speedy growth mean has been possible thanks to a player-first regulatory framework, courtesy of the MGCB. Michigan offers a promising market for operators, thanks to its large population, diverse economy, and increasing acceptance of online gambling.

Pennsylvania:

Regulated by – Pennsylvania Gaming Control Board (PGCB)
Gross Gaming Revenue Tax: 34%

Pennsylvania, with its massive population and strong consumer base, represents a significant market for iGaming. However, its very high GGR tax is bound to be offputting for potential operators. Anyone willing to take the high GGR rate in stride will find the Keystone State a great base of operations, as the PGCB oversees a flourishing iGaming market with a fair and robust regulatory framework.

West Virginia: 

Regulated by – West Virginia Lottery Commission (WVLC)
Gross Gaming Revenue Tax: 15%

West Virginia offers a more niche market compared to the larger states on this list. But the Mountain State makes up for its comparatively lower market potential with more favorable tax rates and a famously easygoing and straightforward regulatory environment courtesy of the WVLC. Additionally, fewer other iGaming operators in the state also mean a less competitive environment for start-ups, making West Virginia a great place for new operators to enter the market.  

Connecticut:

Regulated by – Connecticut Department of Consumer Protection (DCP)
Gross Gaming Revenue Tax: 18%

Connecticuts iGaming industry is relatively new, but its growing population, proximity to major cities, and supportive regulatory framework make it a promising market. From a tax standpoint, the Constitutions State’s GGR is neither the most favorable, nor is it offputtingly high. The DCP has implemented a player-friendly environment, creating a trusted public association with iGaming businesses. 

Delaware:

Regulated by – Delaware Division of Gaming Enforcement (DGE)
Gross Gaming Revenue Tax: 51%
Delaware’s iGaming industry has been operational for several years, a confidence boost for new operators who can know they are stepping into an established stable market. The DGE is well regarded by operators and players alike, thanks to their reputation for transparency and fairness. However, the First State’s smaller population limits its overall market, and the extremely high GGR tax rate cannot be ignored.

Rhode Island:

Regulated by – State Lottery Division of the Department of Revenue (RIDOR)
Gross Gaming Revenue Tax: 51%

Another early adopter of iGaming, The Ocean State offers a small market focused on sports betting. Rhode Island’s limited population and market size, coupled with a high GGR will restrict growth potential. Additionally, the RIDOR focuses on sports betting and is limiting on iGaming, making for a difficult environment for new ventures to find their feet.