Sports Betting vs Gaming – Skill, Luck and Global Tax Policy: Part 2

Author: Sam Davies

If the UK debate has forced uncomfortable questions about where betting sits on the spectrum between skill and chance, looking abroad only complicates the picture further. From the United States’ fragmented tax regimes to Europe’s contrasting regulatory philosophies and Asia’s sharply divided approaches, gambling is classified and treated in strikingly different ways around the world. These international comparisons reveal that the distinction between betting and gaming is rarely settled by mathematics alone. Instead, it is shaped by culture, politics and economic priorities, with tax policy often reflecting how societies choose to interpret risk rather than any universal truth about how gambling works.

A Transatlantic Perspective on Gambling Taxes

The UK’s recent debate over horse racing and tax reform might seem like a peculiarly British quarrel, but the questions it raises echo loudly across the Atlantic. In the United States, where sports betting has exploded since the Supreme Court struck down the federal ban in 2018, regulators face their own challenges in drawing distinctions between wagers on live events and other forms of gambling. The tax implications of those choices are already shaping the future of the American market.

Unlike the UK, where gambling has historically been highly centralised, the US operates under a patchwork of state-by-state regimes. Each state sets its own rules for licensing, permissible bets and – crucially – tax rates. Some, like New York, have set headline-grabbing rates as high as 51% of gross gaming revenue, while others, like Nevada, maintain much more laissez-faire models. This inconsistency reflects not just economic priorities but also cultural attitudes: some states treat betting primarily as a revenue generator, others as a leisure industry to be nurtured, and others still as a social vice to be contained.

Within this landscape, sports betting has often been granted more favourable tax treatment than online casino gaming. The rationale is familiar: wagering on the outcome of a basketball game or football match is framed as a contest of judgment, while playing digital slots is portrayed as pure chance. Yet as sportsbooks expand into “micro-betting” – wagers on individual plays within games – the boundary between betting and gaming begins to blur in ways reminiscent of the UK’s horse racing debate. Are such bets really different from pressing spin on a slot reel, when both hinge on short-term events decided in seconds?

There are already signs that regulators are beginning to grapple with this question. States like Illinois and Massachusetts have floated adjustments to tax rates, arguing that sports betting operators are reporting record revenues without necessarily delivering the social benefits they promised. In parallel, critics note that the advertising blitz around sportsbooks has created an environment where gambling is not only more accessible than ever, but also more detached from the “skill” narrative traditionally used to justify lighter regulation.

The comparison with the UK is instructive. While Britain ultimately stepped back from implementing a higher tax on horse racing bets, the episode highlighted how quickly political sentiment can shift. Just as racing stakeholders feared being classed alongside roulette tables, US sportsbooks may one day find themselves taxed in parity with online casinos, particularly if public perception shifts toward seeing betting as just another form of gaming. With budget deficits looming in several states, the temptation to equalise rates may prove irresistible.

For now, the US industry remains buoyant, fuelled by high-profile partnerships with sports leagues and media companies. But the underlying question mirrors Britain’s: is betting truly distinct from gaming, or are they two sides of the same coin? The answer could determine not just how much bettors pay in tax, but how sustainable the business models of entire sports prove to be in the long run.

While debates around betting and gaming taxation often focus on how governments tax operators, players face a separate set of obligations. In the United States, gambling winnings are treated as taxable income at the federal level, regardless of whether they come from sports betting, casino play or lotteries. For those players, a gambling tax calculator and guide can provide a practical overview of how winnings are taxed under federal rules.

How Do Other Countries Classify It?

While the UK’s debate over betting tax may feel parochial, it is part of a much larger global question: how do different nations classify, regulate and tax gambling? The answers vary wildly, reflecting not just economic priorities but also cultural traditions and political philosophies.

In France, sports betting is dominated by the pari-mutuel model, particularly for horse racing. Bettors’ stakes are pooled, the house takes a commission, and winnings are distributed among those who picked the winners. This system is framed as less predatory than fixed-odds betting, since the operator doesn’t directly profit from punters’ losses. Taxes are levied not as a flat percentage of winnings, but as part of a broader contribution to state coffers and the sport itself. It positions betting as a managed, quasi-public activity, not a pure gamble.

Italy takes a very different approach. Sports betting is taxed at rates closer to casino-style gaming, a reflection of the country’s longstanding association between gambling and state revenue generation. Here, the line between “skill-based” and “luck-based” is blurred intentionally: whether one spins a wheel, buys a scratch card or bets on a football match, the state frames it all as taxable leisure. For policymakers, the central concern is not how consumers perceive the activity, but how to secure a predictable income.

Nowhere is the cultural dimension clearer than in Asia. In Hong Kong, horse racing is a legal, tightly controlled monopoly under the Hong Kong Jockey Club. Betting is taxed heavily but celebrated as part of civic life, with revenues channelled into public welfare projects. The activity is marketed as an elite sport, bound up with colonial history and social prestige.

Just across the border, however, the picture is dramatically different. Mainland China bans most forms of gambling, yet vast illicit markets thrive online and offline. Sports betting here is treated as an underground vice, driven further from regulation and consumer protection. The contrast illustrates how classification – legal vs. illicit, skill vs. luck – is often a political choice rather than an objective truth.

Against this backdrop, the UK’s recent consideration – and subsequent retreat – from aligning horse racing betting tax more closely with casino-style gaming raises a broader question. If Britain, with its deep equestrian traditions, were to redefine betting in primarily chance-based terms for tax purposes, would other jurisdictions follow? Regulators in Europe, Asia and beyond often look to each other for precedent. Even a debated proposal can influence international thinking, particularly if consumer-protection arguments gain political traction.

Yet the opposite is also possible. Countries like France and Hong Kong may double down on models that explicitly distinguish betting from gaming, emphasising local culture and tradition as justifications for keeping regimes separate. In this sense, the UK debate is not just a domestic tax story but a test case for whether global gambling regulation moves toward convergence or continues to fragment along regional and philosophical lines.

The Blurred Future of Betting and Gaming

While regulators debate whether betting should be treated as a matter of skill or luck, the market itself appears to be moving past the question. Increasingly, the industries of sports wagering and casino gaming are converging in ways that make traditional distinctions harder to sustain.

On the most popular betting apps, live odds on football or horse racing now sit alongside digital roulette wheels, online blackjack tables and slot machines. For a younger generation of bettors raised in an era of seamless mobile platforms, switching between predicting the next goal scorer and spinning a reel takes little more than a swipe of the thumb. These activities are no longer experienced as separate pursuits with distinct cultural meanings, but as different expressions of the same digital pastime.

Artificial intelligence is further eroding the idea of sports betting as a purely skill-driven activity. Sophisticated algorithms can crunch vast datasets to produce “smart” betting suggestions, reducing the need for deep sporting knowledge. When predictive models outperform many human bettors, the distinction between informed analysis and automated probability begins to blur. Then comes the question of whether placing a wager on a match is any more skill-based than trusting a slot machine’s random number generator? The human element is still there – the decision to back or ignore the AI’s advice – but the line between informed judgment and machine-generated prediction is becoming harder to draw.

Operators themselves are reinforcing this convergence. Sportsbooks are increasingly marketed not as niche tools for sports fans, but as entertainment platforms designed to compete with streaming services, video games and social media. Advertising increasingly emphasises excitement, community and lifestyle, rather than expertise or strategy. This repositioning suggests the industry sees value in blurring boundaries, appealing to customers less as traditional punters and more as digital consumers in search of engagement.

If this trend continues, the cultural and political distinctions between betting and gaming may dissolve, not because policymakers legislate them away, but because consumers experience them as interchangeable. Tax frameworks could simply be catching up with behaviour already visible in the marketplace. The more sports betting looks, feels and functions like gaming, the less tenable the old arguments for separation become. Whether welcomed or resisted, the blurred future suggests that the debate over skill versus luck may ultimately be settled by technology and consumer habits rather than by law.

A Tax Debate with Global Consequences

The fact that a single policy proposal could provoke fears of silencing an entire sport highlights the weight of the questions at hand: how do we define the very nature of betting, and who gets to decide what counts as skill versus luck?

Ultimately, the fragility of the skill-luck divide raises a provocative question: if the line can be challenged so easily, was it ever as solid as tradition suggested? Even without an enacted tax change, the UK horse racing episode demonstrates how quickly long-standing assumptions can be destabilised. The consequences extend far beyond betting shops, shaping how societies understand risk, reward and expertise at a moment when sports, games and gambling are converging more tightly than ever in a digital world.