Sports betting is legal in 36 states, Washington D.C. and Puerto Rico.
Permitting online sports wagering increases participation in sports betting.
Sports wagering may lead to a higher risk of gambling problems, but more research is needed to establish a causal relationship.
Currently, 36 states, D.C., and Puerto Rico allow sports betting (Figure 1; AGA 1 2023). In 1992, the Professional and Amateur Sports Protection Act prohibited sports betting in all states, except for those that already allowed it (NV, OR, MT, DE). This policy was reversed in 2018 by the Supreme Court on the grounds that it violated the Tenth Amendment.
Most sports wagers collected by a sports betting operator are paid out to individuals who made successful bets. The sports betting operation collects the remaining money as gaming revenue. Nationwide, gaming revenue is about 7.2% of the total amount of money wagered on sports betting (Brainerd 2023).
Nationwide, on average, taxes on all forms of gambling account for about 2.5% of a state’s budget (Brainerd 2022).
The state tax revenue from sports wagering can vary greatly. In 2022, for example, WY generated $840,000 and NY generated $693 million in tax revenue from sports betting
MO does not allow sports betting, but some border states (KS, IL) allow online sports betting. A person must be in a state where sports betting is legal to make a sports bet online.
Since most states have only recently passed laws allowing sports betting, rigorous studies investigating the effects of specific policies on state tax revenues are not yet available. There are several implementation considerations that can affect public participation in sports betting and the amount of tax revenue generated.
Tax rates. Tax rates on gaming revenue typically range from 5% to 20% in most states; RI and NY have a tax rate of 51% (Brainerd 2023). NJ has a higher tax rate for online wagering versus on-site wagering (DGE 2022). The relationship between tax rates and state gaming revenue is unclear (Brainerd 2023).
Licensing and renewal fees. Some states impose license and renewal fees on sports betting operators, which can range from $500 (AZ) to $20 million (IL; Lee 2022).
State fund allocation. States allocate sports wagering funds in many ways, including as general revenue, or dedicated funds for gambling addiction programs, education, or state highway expenditures (Brainerd 2023).
Online betting. Online sports wagering increases participation due to its convenience (Brainerd 2022). In 2021, 90% of NJ’s and 75% of PA’s sports betting tax revenue came from mobile and online wagers.
In-person registration. Requiring in-person registration to place a sports bet can prevent underage and unauthorized gambling (Brainerd 2023).
Because U.S. sports betting was made legal in 2018, there is limited research characterizing how sports betting impacts health and social outcomes in the U.S. More research is needed to determine if the availability of sports betting causes changes in rates of gambling addiction. For information on adolescent gambling and mental health, see our Science Note.
Women are much less likely than men to participate in sports betting (Wood 2011). Sports betters who demonstrate problem gambling are most likely to be male, under 35 years old, employed or studying, have a high level of education, engage in other types of gambling, have significant others or friends who also participate in sports betting, and are more impulsive when betting (Winters 2019).
American Gaming Association (AGA 1). (2023, January 12). AGA commercial gaming revenue tracker. American Gaming Association. Retrieved February 13, 2023, from https://www.americangaming.org/resources/aga-commercial-gaming-revenue-tracker/
American Gaming Association (AGA 2). (2023, January 31). Interactive U.S. map: Sports betting. American Gaming Association. Retrieved February 13, 2023, from https://www.americangaming.org/research/state-gaming-map/
Brainerd, J. (2022, March 14). March Madness Fuels Sports Betting Trend. National Conference of State Legislatures. Retrieved February 13, 2023, from https://www.ncsl.org/state-legislatures-magazine/march-madness-fuels-sports-betting-trend
Brainerd, J. (2023, March 1). The early bets are in: Is sports betting paying off? National Conference of State Legislatures. Retrieved February 13, 2023, from https://www.ncsl.org/fiscal/the-early-bets-are-in-is-sports-betting-paying-off
Eilers & Krejcik Gaming LLC (EKG). (n.d.). (rep.). In-Person Registration For Online Sports Betting A Quantitative And Qualitative Analysis. Retrieved February 13, 2023, from https://ideagrowth.org/wp-content/uploads/2020/01/EK-iDEA-In-Person-Registration-Research.pdf.
Feeney, D. (2021). (rep.). National Survey on Gambling Attitudes and Gambling Experiences 1.0. National Council on Problem Gaming. Retrieved February 13, 2023, from https://www.ncpgsurvey.org/wp-content/uploads/2021/03/NCPG_NGAGE-Natl_Detailed_Report-Public.pdf.
GeoComply. (2023) printed slide deck.
Lee, J., & Kanso, D. (2022). (rep.). Fact Sheet: Sports Betting. Georgia Budget & Policy Institute. Retrieved February 13, 2023, from https://gbpi.org/wp-content/uploads/2022/01/Sports-Betting-Fact-Sheet-v4.pdf.
New Jersey Division of Gaming Enforcement (DGE). (2022). (rep.). Summary of Gaming and Atlantic City Taxes and Fees. Retrieved February 13, 2023, from https://www.nj.gov/oag/ge/docs/Financials/QuarterlyFinRpt2022/AC%20Specific%20Taxes%20and%20Fees%201978-2022.pdf.
Spectrum Gaming Group (SGG). (2018). (rep.). SPORTS BETTING IN DISTRICT OF COLUMBIA: Analysis and Business Case of the Economic Impact of Regulating and Operating Sports Betting through the DC Lottery. Retrieved February 13, 2023, from https://dclottery.com/sites/default/files/2023-01/olg-spectrum-report-dc-lottery-final.pdf.
Winters, K. C., & Derevensky, J. L. (2019). A review of sports wagering: Prevalence, characteristics of sports bettors, and association with Problem Gambling. Journal of Gambling Issues, 43. https://psycnet.apa.org/record/2020-60635-006
Wood, R. T., & Williams, R. J. (2011). A comparative profile of the Internet Gambler: Demographic Characteristics, game-play patterns, and problem gambling status. New Media & Society, 13(7), 1123–1141. https://doi.org/10.1177/1461444810397650