US Considers 10% Sports Betting Tax With $182 Billion Revenue Potential
WASHINGTON, D.C. – Analysts say raising the federal sports betting tax to 10% could generate about $182 billion between 2027 and 2036.
LISTEN TO THIS ARTICLE:The proposal has moved into focus in federal policy discussions and could reshape operator margins, bettor behavior, and state-level gaming revenues.
The debate over how to tax the booming US sports-betting market has moved to the center of fiscal conversations in Washington. Since the US Supreme Court struck down the Professional and Amateur Sports Protection Act (PASPA) in 2018, states have legalized wagering, and the industry has grown from about $7 billion to an estimated $167 billion in annual handle. Under current federal rules, a tiny 0.25% excise levy applies to each wager, a rate that has not been updated in decades.
Recent modeling by Budget Lab and other fiscal analysts has explored higher federal options. A 5% ad valorem tax on wagers is estimated to raise close to $100 billion over the next ten years. A 10% rate – often discussed by some budget writers and lawmakers – would generate roughly $182 billion from fiscal years 2027 through 2036, according to the same projection, while potentially reducing the total number of bets placed by about 10%.
Budget Lab’s modeling also tested a per-bet fixed tax: $0.05 assessed on each wager. That approach, proponents say, would bring in a far smaller sum – about $1.3 billion over FY2027-2036 – but could alter bettor behavior differently than a percentage tax because it imposes the same charge on small and large stakes alike.
"A percentage tax scales with the size of bets and is more effective at capturing revenue from the growing mobile market", said a Budget Lab economist. "By contrast, a small fixed-dollar fee generates limited revenue but can be more regressive for casual, low-stakes players."
Related: Chicago Sports Betting Tax Set to Take Effect After Mayor Declines Budget Action
More Finance
Industry and Regulatory Response
Supporters of a higher federal tax argue it could quickly become one of the federal government's largest excise receipts, second only to the federal fuel tax, and provide funds for public priorities such as problem-gambling programs, state aid, or deficit reduction. Some lawmakers have suggested earmarking proceeds to expand treatment and prevention services at the state and federal level.
Opponents warn that a sharp federal increase could push bettors toward unregulated offshore sites and informal betting networks, undermining consumer protections and eroding state tax bases that currently rely on mobile wagering revenue. States such as New Jersey, Nevada and Pennsylvania, which depend on sports-betting income for budget items and gambling-regulation costs, have signaled concern about any policy that might depress activity.
An executive at a mid-size sportsbook argued that "too high a federal levy risks sending volume to unregulated markets and could hollow out state revenues that fund problem-gambling programs and oversight. We need a balanced approach that protects consumers but preserves legal market liquidity."
Complicating matters, a separate federal tax change taking effect in 2026 limits gamblers’ ability to fully offset losses against winnings for income-tax purposes, a move that may increase taxable income for some bettors even if they break even over the year. That shift has already drawn attention from both industry stakeholders and tax advisers.
Policy Trade-Offs and Next Steps
Congress faces a classic policy trade-off: higher federal revenues versus the risk of diverting activity to unregulated channels and disrupting state budgets. Any change would require lawmakers to weigh the distributional impacts of ad valorem versus fixed-dollar approaches, consider enforced reporting and compliance mechanisms through the Internal Revenue Service, and decide whether revenue should be dedicated to treatment, enforcement or general spending.
For now, there is no consensus in Congress or at the Treasury. Further analysis from the Congressional Budget Office or the Department of the Treasury could influence the direction of any legislative proposals. Meanwhile, the industry continues to expand, and regulators at both state and federal levels will face mounting pressure to reconcile rapid market growth with consumer protections and fiscal policy goals.
RELATED TOPICS: Finance
Latest News
Casinos & Games
Review this New Post
Leave a Comment
User Comments
Comments for US Considers 10% Sports Betting Tax With $182 Billion Revenue Potential