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.