New Report: Sports Gambling Tax Revenue Disappoints
Research finds sports betting generates little state revenue while imposing significant fiscal and social burdens
NEW YORK, NY – Since the Supreme Court ended the federal prohibition of sports gambling in 2018, 39 states have created legal markets. Advocates frequently cited new tax revenue as a key justification for legalization. But a new Manhattan Institute report from senior fellow Charles Fain Lehman finds the fiscal case for legalized sports gambling is far weaker than commonly claimed.
Sports gambling revenue gains are modest and often offset by broader economic and social harms. Key insights from the report include:
- Sports gambling tax revenue accounts for roughly 0.2 percent of state tax collections on average, making it a negligible source of revenue for most states.
- Evidence suggests that sports gambling frequently cannibalizes existing revenue streams, particularly state lottery receipts, reducing or eliminating net fiscal gains.
- A growing body of research links sports gambling legalization to higher rates of bankruptcy, loan delinquencies, problem gambling, child maltreatment investigations, crime, domestic violence, and other social harms. These social problems inevitably end up on state balance sheets, further eating into any tax revenue.
These realities are reflected in the case of Ohio, which has struggled with scandals since legalizing in 2023. While the state has generated over $200 million in tax revenue from legalization, Lehman estimates that legalization is also costing it somewhere between $130 million and $220 million—eroding some or all of the putative gains.
The sudden, widespread, and largely unregulated legalization of sports gambling has created social and individual consequences. Many states are facing a backlash, and some legislatures are considering regulations meant specifically to curb addiction and game-rigging. This report offers evidence that the revenue generated by sports gambling should not be a barrier to regulation. Rather, sports gambling taxes should be set to minimize harms—not to maximize revenue.
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