Tax Policy Trending

States Find New Source of Tax Revenue After Court Legalizes Sports Betting

In a 6-3 decision, the Supreme Court struck down a 1992 federal law that effectively bared most states from legalizing sports betting. The court’s decision in Murphy v. NCAA concluded, “the legalization of sports gambling requires an im­portant policy choice, but the choice is not ours to make.”

New Jersey, Pennsylvania, Delaware, Connecticut, Iowa, Mississippi, New York, and West Virginia are just some states to publicly announce plans to regulate and tax legal sports betting within its borders.

But simply passing legislation making it legal to bet on sporting events isn’t enough for these major gambling hubs. Setting tax rates, age restrictions, consumer protections and licensing will be no easy legislative task.

Take for example states with casinos on its boarders. Making the tax too high can push demand towards other states while setting the tax too low can potentially cause the state to lose miss out on millions of dollars in revenue.

Although this might be a heavy lift, the revenue generated from sports betting could pull in more than $6 billion a year in added state revenue – making it a necessity for many state legislators.

Although legalizing sports betting won’t completely eliminate black market gambling altogether, regulating this practice looks to make it safer and easier for the average sports fan to bet on their favorite sports team.

Although the court’s decision gives back power to the state to regulate sports gambling not all states are rushing to legalize the practice in its state. Some have fears that sports betting will interfere with the legitimacy of major sporting events and call into question the ethics of gambling in general.

Even still, several states look to legalize sports betting and open up the possibility of billions of dollars in revenue each year.


Photo Copyright: <a href='https://www.123rf.com/profile_leshkasmok'>leshkasmok / 123RF Stock Photo</a>

Jeremias Ramos is a CPA working at a nationally recognized full-service accounting, tax, and consulting firm with offices conveniently located throughout the Northeast. Jeremias specializes in tax and business consulting with focus areas in real estate, professional service providers, medical practitioners, and eCommerce businesses.

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