Nebraska lawmakers to discuss online sports betting in July session

The Nebraska state legislature will hold a special session beginning July 25 focused on providing property tax reform. Part of the session will focus on legislation that would put an amendment authorizing online sports betting on the November ballot.

There is new life in the fight to legalize online sports betting in Nebraska.

As recently as April of this year, reports indicated that there was no chance of online sports betting being legalized in Nebraska in 2024. The earliest it could have happened was the 2026 mid-term elections. But that has since changed.

Nebraska Governor Jim Pillen is expected to call for a special session of the state legislature beginning July 25 focused on delivering property tax reform. Gaming officials in Nebraska are lobbying Gov. Pillen and the state lawmakers to discuss online sports betting during this session. 

Despite voicing opposition to online sports betting in the past, Gov. Pillen reportedly has expressed support for an initiative to legalize online sports betting in order to generate revenue that would help him reach his stated goal of reducing property taxes in the state by 50%. According to Omaha local news station KETV, online sports betting could generate an estimated $30 million per year in additional tax revenue for the state. 

There are still several steps remaining before Nebraska residents can legally place online sports bets, but the proposed legislation to put the issue on November’s ballot is a significant step towards paving the way for online sports betting in the Cornhusker State. 

Nebraska casinos lobbying for online sports betting

Casino gaming operators in Nebraska are leading the charge to get online sports betting on the 2024 ballot. 

Ho-Chunk, Inc. is the economic development corporation owned by the Winnebago Tribe of Nebraska and is the parent company of WarHorse Gaming, which is operating temporary casinos in Omaha, Lincoln and South Sioux City. It is also planning to open a permanent casino in Omaha in August, with permanent locations in Lincoln and South Sioux City planned for later in 2024 and 2025. The temporary casinos in Omaha and Lincoln are also two of the four casinos operating retail sportsbooks in Nebraska.

Ho-Chunk is leading the charge to get legislators to approve a bill to put a referendum on online sports betting on the ballot. Ho-Chunk CEO Lance Morgan has said about the potential tax revenue from online sports betting that “It’s additive. It’s not a tax shift. And so we think that’s a pretty viable option. And we’ve been proposing that to be part of this special session.” 

WarHorse Gaming Director of Government Relations Lynne McNally added: “Considering the other options that have been floated around in the news, I certainly think that this is a much more palatable way to raise money.” Those other options include spending cuts and increasing sin taxes. 

State senator Terrell McKinney (D-North Omaha) is one of the strongest advocates for legalizing online sports betting in Nebraska’s 49-seat Republican-controlled legislature. “[Online sports betting tax] revenue that we’re missing out on because we want to be the ‘nanny state,’” he told KETV.

Revenue potential from Nebraska online betting

While there are more factors than just revenue to consider when it comes to legalizing online sports betting, there is undoubtedly significantly more revenue potential from online betting compared to retail betting.

There are numerous reports providing both confirmed and estimated percentages of sports betting revenue from in-person/retail sportsbooks and online/mobile sportsbooks. While the numbers vary depending on the market or the timeframe, many reports indicate that as much as 90% of sports betting revenue now comes from online sources. 

That number matches the breakdown in Nebraska’s neighbor Iowa. The Iowa Racing and Gaming Commission has reported $2.6 billion in sports betting revenue over the last year. Of that revenue, $2.4 billion (92%) has come from online sources. In their 2023 fiscal year, they generated $2.02 billion in revenue from online sports betting, which was 90% of their $2.25 billion in total sports betting revenue.

Compare that to the revenue that the Nebraska Racing and Gaming Commission has reported. As of May 2024, Nebraska had generated $1.7M in sports betting revenue from its four retail sportsbooks since January. Nebraska taxes gaming revenue at 20%, and 70% of those taxes are allocated to the property tax credit cash fund. That means that Nebraska has generated just over $342,000 in tax revenue during that five-month span, including $239,000 dedicated to property tax relief. Over a 12-month span, that would be just over $820,000. 

By comparison, the tax revenue that Nebraska would generate if its online sports betting revenue was similar to Iowa’s would be approximately $481 million. If 70% of that revenue went towards property tax relief, that would be $337 million. 

Of course, comparing Iowa’s revenue to the potential revenue in Nebraska is not an apples-to-apples comparison. Iowa’s sports betting market is much more developed, with 19 retail casinos offering online sports betting, which is nearly five times the number currently operating in Nebraska. Still, even 20% of the projections based on Iowa’s revenue would be over $96 million in tax revenue. When Nebraska voters authorized racetrack casinos in 2020, the state forecasted approximately $400 million in annual gaming tax revenue (including casino games) once the market matures. That projection did not include any revenue from online betting. 

It’s also worth noting that many Nebraska residents reportedly travel to Iowa to place online sports bets. The Lincoln Journal-Star reported in April that geolocation data shows there are approximately 64,000 mobile sports betting accounts in Nebraska, and many of those users are traveling east to Iowa to place their bets. 

How online sports betting could be legalized in Nebraska

For a constitutional amendment authorizing online sports betting to reach the ballot in November, the Nebraska state legislature would need to approve it with a 60% supermajority vote. That means 30 of the state’s 49 lawmakers would need to vote in favor.

If it reaches the ballot, a lower threshold would be needed for Nebraska voters to pass the amendment. It would need just a simple majority (more than 50%) to pass. 

Morgan from Ho-Chunk has stated that its polling data indicates 65% of Nebraskans would vote in favor of legalizing online sports betting. Previous polling data conducted by Ho-Chunk in collaboration with four major U.S. sportsbooks – DraftKings, FanDuel, BetMGM and Caesars – found that 57% of Nebraskans supported online betting.

As a result of that poll, those four sportsbooks declined to pursue a campaign to put online sports betting on the ballot. That would have required 122,000 signatures from registered Nebraska voters, including at least 5% of voters in at least 38 counties. If the legislature does not vote to put it on the ballot, then a citizen petition is the only other option. 

The 2020 referendum to legalize casino gaming and retail sports betting at Nebraska’s horse racing tracks passed easily with 65% of the vote. Time will tell if online sports betting could see a similar outcome in the Cornhusker State in 2024.