Where Does Tax Revenue from Legal Online Casinos Go in Michigan, New Jersey, Pennsylvania, and West Virginia?

Whenever a state legalizes real money online casinos, one of the driving factors – arguably the most significant – is how those jurisdictions can benefit from the newly regulated operators.

Indeed, states with legal iGaming have reaped the rewards of licensed online casinos since the first platforms went live in 2013. Consider last year, during which time the American Gaming Association estimated online casinos generated $8.41 billion in tax revenue across seven states with legal iGaming.

That includes six states that launched online casinos before 2024 setting single-year highs in tax revenue.

Obviously, that's quite a bit of money for state coffers. But where exactly does that money go? Let's take a look at four states to provide a glimpse into how iGaming tax revenue is used – and how users actually contribute just by playing.

Launched in 2021, Michigan online casinos have paid nearly $1.3 billion in taxes, including a record-setting $451.4 million in 2024.

Where that money goes depends on which land-based property online casinos have chosen as a partner.

Operators in corners with commercial casinos, for example, have their tax payments diverted in three ways. Some 65% of taxes go toward the Internet Gaming Fund, which is used to fund problem gambling prevention and first responder support as well as the Michigan School Aid Fund. After 30% of tax revenue heads to the City of Detroit, the remaining 5% supports the Agriculture Equine Industry Development Fund, which looks after the state's horse breeding, research and racing industry.

Some MI online casinos partnered with land-based tribal casinos. Of their tax revenue, 70% is funneled to the Internet Gaming Fund, 20% goes to local governing bodies, and 20% goes to the Michigan Strategic Fund, which promotes economic development by issuing grants and loans to create jobs and support businesses in the state.

Simply put, Michigan makes sure that it makes the most out of its legal online casinos. Sign up for DraftKings Casino in Michigan now:

One of the first states with legal online casinos, New Jersey pocketed more than $1.3 billion in tax revenue from its operators since 2018 and through 2024, which saw a record $358.3 million.

The majority of that total supports the Casino Revenue Fund, which supports seniors and individuals with disabilities in the Garden State by providing financial assistance in various ways.

That includes reducing property, rent and utility costs as well as adding or expanding health services. On top of that, human services programs – like the Pharmaceutical Assistance to the Aged and Disabled and community-based senior programs – benefit from the Casino Revenue Fund.

Beyond that, a smaller portion of tax revenue from NJ online casinos is directed to the Casino Reinvestment Development Authority. This group's purpose is to improve the Atlantic City community and economy by supporting redevelopment projects. Sign up for BetMGM Casino in New Jersey now:

Just across the Delaware River, Pennsylvania keeps things simple while also trying to stretch tax revenue from online casinos as efficiently as possible.

The Keystone State has received over $3.5 billion in tax revenue since PA online casinos went live in 2019 – the highest total of any jurisdiction with legal online casino games. Like Michigan and New Jersey, Pennsylvania set a record during the 2024-25 fiscal year with nearly $1.1 billion in tax revenue.

Those large totals reflect the sky-high 54% tax rate levied on slot revenue by PA online casinos, which also pay 16% on other games.

Such a lofty tax rate on PA online casinos, which regularly top $200 million in monthly revenue, allows state regulators to divert tax payments in several effective ways. That includes the Property Tax Relief Fund, which provides school property tax reductions for homeowners.

In addition, iGaming tax revenue supports economic development and community projects as well as the horse racing industry while also funding responsible gambling and addiction treatment programs. Remaining money then goes to the state's General Fund to support state budget priorities. Sign up for Caesars Palace Online Casino in Pennsylvania here:

Last comes West Virginia, which launched iGaming in summer 2020. In the four full fiscal years since then, WV online casinos contributed nearly $70 million in tax revenue, including – you guessed it – a record $29.7 million in 2024.

Mountain State lawmakers and regulators agreed to divert tax revenue from WV online casinos to the West Virginia Lottery Interactive Fund, which distributes money to the State Lottery Fund.

Essentially, the West Virginia Lottery uses online casino tax revenue to promote and enhance tourism in the state while also supporting senior services and education. That includes setting up scholarship funds, school construction and renovations, and upgraded technology.

What's more, tax revenue from WV online casinos also funds the Division of National Resources and the State Park Improvement Fund.

The big revenue numbers earned by legal online casinos will always steal the headlines. But how tax revenue from those operators is used should not go overlooked.

In a roundabout way, online casino players themselves actually play a part in those contributions.

Grant Lucas