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Cash strapped states are looking to sports betting as the pot at the end of the rainbow.
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One tax policy expert says sports betting is not — and never will be — a major source of tax revenue for states, and states are now starting to figure that out.
“Windfall? Boon? These are all things that should raise red flags,” says Richard Auxier, research associate in the Urban-Brookings Tax Policy Center at the Urban Institute.
“Billions turns into hundreds of millions for the sports books. 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.”
It’s not all doom and gloom. New Jersey has enjoyed great success with sports betting so far.
Auxier says that’s because they already had the infrastructure in place and embraced online wagering, which now accounts for up to 80%.
But in other states, it’s been less of a win, Yahoo Finance notes. In the District of Columbia and Tennessee for example, according to Auxier, there wasn’t a gaming-friendly infrastructure in place so the start wasn’t as smooth. Other states like Pennsylvania had issues with their licensing fees. Still others like Rhode Island decided not to allow online gambling.
- Aaron Goldstein, Gambling911.com
