10% Sports Betting Tax Expected to Raise $182B

(AsiaGameHub) –   Sports betting in the United States has undergone a major transformation over the past few years, more precisely, ever since the Supreme Court paved the way for individual states to legalize the activity in 2018.

First valued at $7 billion when it launched, the sector steadily expanded to an impressive $167 billion by last year, a surge largely driven by mobile apps that have removed the previous limit restricting betting to casinos or dedicated sportsbooks.

Today, nearly all wagers are placed online, making participation far more convenient and efficient for people. States that currently permit sports betting have already seen clear financial benefits, with tax revenues that serve as critical support for public budgets climbing steadily.

In the meantime, the federal government only collects a tiny portion of these funds, via a long-standing 0.25% tax applied to every individual wager.

This rate has remained unchanged for decades, and discussions around whether it should be adjusted have been growing increasingly prominent in Washington.

5% Tax Would Bring In $100B Over 10 Years

Some analysts propose raising the tax rate to 5%, a shift that recent estimates show would generate nearly $100 billion in revenue over the next decade.

An even higher rate, such as 10%, could produce as much as $182 billion from fiscal years 2027 to 2036, while reducing the total number of placed bets by 10%.

This level of revenue would be enough to make the sports betting tax the second-largest federal excise tax in the country, trailing only the gas tax.

The Fixed-Dollar Per-Bet Tax Proposal

Apart from the 5% and 10% tax rate options, the Budget Lab “also modeled a more modest, fixed-dollar tax on sports wagers: $0.05 per transaction.”

The corresponding model notes it would “raise a far smaller amount of revenue, just $1.3 billion from FY2027 to 2036, compared to the 5% ad valorem tax, but over the long term its impact could be more notable by cutting the total number of bets placed.”

At the same time, proponents argue sports betting should be treated the same as other taxed activities, such as alcohol or tobacco sales, noting that a higher tax level would bring in meaningful revenue while potentially curbing excessive gambling.

Wider concerns about the broader impacts of betting have also been raised, including financial hardship for some users and the growing normalization of gambling in mainstream sports culture.

Critics, however, warn that higher taxes could drive people toward unregulated markets. Offshore websites and informal betting networks already operate, and stricter rules could make these options far more appealing to users.

States that rely heavily on betting revenue have also voiced concerns, as a drop in betting activity would likely reduce their own tax income.

Another recent policy change has already caught bettors’ attention. Starting in 2026, gamblers will no longer be able to fully offset their losses against their winnings when calculating their tax liability. This means some people may owe taxes even if they break even on their betting activity overall.

For now, lawmakers are weighing all available options. The sports betting industry continues to expand, but key questions remain over how it should be taxed and regulated in the years ahead.