The Legalization of Sports Betting: Implications and Consequences

With a little over five years in the books since the US Supreme Court overturned a federal ban on sports gambling in May of 2018, enough time has passed to take a comprehensive look at how the industry’s legalization has affected the country, for better and worse.

The Legalization of Sports Betting: Implications and Consequences

Increased Access to Sports Betting

With more than half the states in the US now allowing for mobile sportsbooks to operate legally (and more than two-thirds of states signing off on in-person books), much of the country has access to sports betting.

Early Patterns and Major Events

As each passing state legalizes sports betting, a familiar pattern falls into place. The first few weeks and months of legalization see a rush of business as consumers want to get in on the action: bonuses like sportsbook promo codes help to attract potential customers, and many states pass their legislation to ensure that the sportsbooks will go live early in the year when the busiest months occur because of events like the Super Bowl and March Madness. From there, the industry falls into a settled pattern, with major events like championships spurring rushes and a healthy amount of action through the rest of the year as consumers get acquainted with the industry.

Taxation and Profitability

From the business side of things, much of the impact of sports gambling centers around the taxes levied on winnings. As businesses, sportsbooks are taxed at a much higher rate than the average person is. For example, in New York, that figure runs as high as 51 percent (even before considering the federal tax cut).

Despite this high tax rate, sportsbooks still want to operate in the Empire State, indicating the profitability of the industry. In contrast, other states like Ohio impose a lower ten percent tax rate to ensure that sportsbooks continue to find it profitable to operate, preventing the creation of black market books that would siphon tax revenue away from the state through under-the-table dealings. However, Ohio Governor Mike DeWine is proposing to double the tax rate on bets won by sportsbooks to 20 percent, which could lead to other states following suit to increase revenue.

Charitable Allocation of Tax Revenue

Taxes levied on sports betting are often set aside for specific charitable funds. This ensures that the people of each state can witness the money in action, rather than having it deposited into a general state budget fund. Various states allocate these funds to different charitable causes, including youth sports programs, initiatives to help problem gamblers, and assistance for the elderly and underprivileged communities.

Addressing Stigma and Promoting Diversity

While the reception of the mobile sports betting industry has generally been positive, lawmakers acknowledge that the industry carries a stigma due to issues such as problem gambling and the shady reputation of illegal bookies. To counteract this, they have ensured that the tax revenue from the industry is used for charitable causes, benefiting the community. Some states, like Maryland, have taken additional steps to promote diversity and inclusion by reserving a share of the industry for traditionally underrepresented groups, such as minorities and women.

Community Outreach and Brand Responsibility

Sportsbooks themselves recognize the importance of community outreach and protecting their reputation. Brands like FanDuel have taken steps to increase the presence of women in both sports and the world of sports gambling. They achieve this by partnering with sports newsletters like Gaming Society to release dedicated columns on women’s sports, drawing attention to underrepresented leagues like the WNBA.


Five years since the legalization of sports betting, the industry has significantly impacted the United States. Access to sports betting has expanded, patterns have emerged, taxation has affected profitability, and tax revenue has been allocated to charitable causes. Efforts have also been made to combat stigma, promote diversity, and engage.

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