Tax Expert Claims States Cashing In On Sports Betting

It should be a godsend for states, yet sports wagering hasn’t gone the way many had hoped in the months following the Supreme Court decision in 2018 to legalize betting.

One leading tax expert says sports wagering isn’t, and never will be, a savior of providing large sums of tax income for states, and states are beginning to make sense of those early disappointing returns.

“Windfall? Boon? These are all things that should raise red flags,” says Richard Auxier, a research associate at the Urban-Brookings Tax Policy Center at the Urban Institute.

Source: finance.yahoo.com

For quite a long time, Nevada was the main state where bettors could lawfully wager on a game. But that monopoly came to a close in May 2018, when the Supreme Court decision finished government limitations on state sports wagering.

Before the end of 2018, Delaware, New Jersey, Mississippi, New Mexico, Pennsylvania, Rhode Island, and West Virginia approved sports betting. At the moment, you can put down a legal sports wager in 13 U.S. states.

Sports gambling is a $150 billion dollar business, and the American Gaming Association says 39% of adults in the U.S., or around 100 million individuals, are either present or potential future sporting event bettors.

The AGA anticipates that overall number should rise as more customers use mobile apps and visit casinos. The Urban-Brookings Tax Policy Center at the Urban Institute says about $10 billion has been bet so far in 2019.

Auxier believes the sagging revenue figures aren’t necessarily about betting volume or total dollars. “Some of (those who wager) actually win their bets, and the taxes are on the losses, what the casino takes in,” he says.

“Billions turns into hundreds of millions for the sportsbooks. And then the states will typically tax like 10% to 15% of that,” he says. “So now we’re only talking about a couple of million dollars.”

Source: finance.yahoo.com

Why is New Jersey Winning the Tax Revenue Game?

Auxier told Yahoo Finance that out of all the states that have legalized sports betting, New Jersey is the clear winner thus far. One of the primary reasons is that New Jersey was ready to implement sports betting at the moment of the Supreme Court’s decision in 2018.

Bettors in New Jersey have wagered more than $293 million on games in August 2019 alone, allowing Atlantic City’s casinos to win 13% more than they did in the previous August.

Another reason for success in New Jersey is the state immediately allowing internet wagering and giving an opening to popular organizations like FanDuel and DraftKings to run sportsbooks.

Web-based betting presently represents about 80% of every legal wager in New Jersey. According to the New York Times, New Jersey passed Nevada as the wagering capital of the U.S. this year.

As great as sports betting has been for New Jersey, in different states, it’s been far less of a success.

In states like Tennessee and the District of Columbia, the implementation of sports betting has been difficult with swirling controversies that has slowed the release of wagering.

Other states like Pennsylvania were slow to adopt online wagering and in places like Rhode Island, the state has chosen not to permit web-based betting at all, causing major losses.

While Auxier says revenue from gaming for any U.S. state won’t do something truly monumental eradicate a huge deficit, there are a few advantages for early-adopting states.

“Can this go to help fund some worthwhile public service programs? Yes,” he said. “But can this money fix your budget deficit? Can it fund your Medicaid and education programs? No.”

Source: finance.yahoo.com

Regardless of the lackluster early returns, chances are that states will continue to chase betting revenue as a hopeful source of funding their state’s most needy programs.