States Should Continue to Legalize Sports Betting | Citizens Against Government Waste

States Should Continue to Legalize Sports Betting

The WasteWatcher

After the Supreme Court found the Professional and Amateur Sports Protection Act (PASPA) of 1992 to be unconstitutional in its 7-2 ruling in Murphy v. NCAA in May 2018, states were free to determine whether to legalize sports betting.  Since the decision was made, 22 states have legalized sports betting, while Ohio and Massachusetts, among other states, continue to debate legalization without any legislation getting through the legislature. 

While sports betting has mostly been enabled as soon as bills have been signed into law, Maryland, Louisiana, and South Dakota voters will be considering provisions on the November 3 ballot that would allow betting to move forward. 

The Maryland Constitution requires voters to approve any changes to commercial gambling laws.  The ballot initiative asks voters, “Do you approve the expansion of commercial gaming in the State of Maryland to authorize sports and events betting for the primary purpose of raising revenue for education?”  If this measure is approved, the Maryland legislature would determine how sports betting would be implemented some time in 2021 at the six casinos located in the state.  Maryland will be late to the sports betting party, as Delaware, Pennsylvania, Virginia and Washington, D.C. are already taking bets at various facilities.    

The Louisiana legislature has attempted to pass sports betting laws, including 2019, when a bill to legalize fantasy sports was vetoed by the governor.  Another bill that died on the last day of session would have allowed sportsbooks for race casinos and race tracks on the ballot in November 2019.  In 2020, the legislature finally passed a bill to allow voters to decide whether individual parishes should legalize sports wagering. 

The South Dakota legislature approved SJR 501 in March 2020, which adds a ballot measure to let voters decide whether sports betting should be legalized in the city of Deadwood, the only jurisdiction in the state that is allowed to have gambling.  State law allows Indian casinos to offer any betting that is allowed in commercial casinos, so the referendum would also cover them.  If the referendum passes, the legislature will determine how sports betting will be implemented in the 2021 session.  The South Dakota Legislative Research Council’s December 19, 2018 fiscal analysis estimated that “adjusted gross revenue for overall gaming action in Deadwood is expected to be $100,546,650.  Adjusted gross revenue for sports betting in South Dakota is expected to be $2,051,972 of which the State would expect to tax at 9 percent, thereby generating an estimated $184,678 in new tax revenue.”

The results of these ballot measures could lead to half of the states legalizing sports betting. 

In Ohio, the House of Representatives passed HB 194 on May 28, 2020  The bill calls for mobile betting with a 10 percent tax overseen by the Ohio Lottery Commission, and the proceeds would be spent on education.  In the Senate, SB 111 would allow sports betting with a 6.25 percent tax overseen by the Ohio Casino Control Commission, and the proceeds would go to the general revenue fund for state operations.  The bill remains in committee and has not been vote on by the full Senate. 

Massachusetts Governor Charlie Baker (R) has long advocated for the legalization of sports betting.  However, while a number of bills have been introduced relating to the issue, the Massachusetts Legislature has not passed any bill due to concerns about the regulations and ensuring more entities are involved with the legislation. 

It may come as a surprise that Nevada, one of four states grandfathered for sports gambling under PASPA and therefore decades ahead of the remaining states, does not bring in the most revenue from sports betting.  While people do spend more on betting in Nevada, the tax rates are lower than in New Jersey.  New Jersey has an 8.5 percent tax in person and 13 percent for online betting compared to Nevada at a 6.75 percent rate.  Between June 2018 and September 2019, New Jersey received $36.12 million in tax revenue while Nevada received $27.51 million in tax revenue. 

With the potential for half of the states to agree to sports betting by the end of 2020, the benefits of the Murphy decision are becoming clear.  States have shown that they can generate a lot of revenue and safely manage sports betting.  But lessons can be learned about where the line should be drawn to avoid overtaxing bettors and the gambling industry.  More states should continue to legalize and expand sports betting.

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