2 To give a potential benchmark, in the UK, which has a well-developed sports betting market, the total amounts of betting on sports per year is currently about £36 billion, equivalent to £530 per person. Gambling in these markets is already large, with $136 billion placed in legal sports betting markets since the 2018 Supreme Court ruling but the market seems likely to grow substantially over the next few years. This is an important topical issue because in May 2018, the United States Supreme Court declared the Professional and Amateur Sports Protection Act (PASPA) to be unconstitutional, thus opening the way for individual states to introduce legislation permitting sports betting.Īs of June 2022, thirty states had legalized sports betting in various forms and other states are likely to follow (see Fig. 1 This paper examines how the current US tax code affects the incentives for taking risk by betting on sports. Research on gambling has also pointed to the role that taxation has played in determining the form and location of betting markets and in affecting the extent of losses experienced by different groups. Classic contributions including Domar and Musgrave ( 1944), Feldstein ( 1969) and Poterba ( 2002).

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Alabama gambling losses income tax