How States Are Spending Their Sports Betting Tax Revenue

As states across the country are discussing legal sports betting, there has been much ado about sportsbooks operating on thin margins, which is news to a lot of lawmakers. By most accounts, a sportsbook earns between $1-$2 in net revenue from every $100 bet after all the money is divvied up. So where does the money go?

Much of it goes back to the winning bettors and there are the obvious expenses — paying employees, buying software and equipment, purchasing or renting space. And then there are taxes. The seven states that have legalized sports betting so far* apply wildly different tax rates on gross sports wagering revenue, from 6.75 percent in Nevada to more than 50 percent in Rhode Island.

In states currently seeking to become a legal sports betting states, some lawmakers are looking to earmark tax revenue for specific programs. In Kentucky, legislators hope it will help alleviate the state’s (humongous) pension-fund issue and in Illinois lawmakers are hoping sports betting revenue will put a dent in the state’s budget shortfall, which is $1.2 billion for fiscal year 2019. Others like Washington D.C. are eyeing Arts and Humanities, and early childhood education programs.

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