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Why Online Gambling Can Provide Plenty of Tax Revenue


If the regulations were changed and the government allowed online gambling, then the government would be able to tax it.

With a gigantic federal deficit and a number of state deficits out of order, the thought of growing the sportsbook industry and loosening the regulations for online gambling is a hot topic in the United States. The real question is: What types of tax revenue benefits are there if sportsbooks are legalized?

There are always the negative concerns about gambling that are brought up: Addiction, obsession, and regular people losing money. At the same time, those in favor of online gambling would suggest that it's merely a form of entertainment. Some people spend money on theater, some people spend it on travel, and some wish to spend it on gambling. Who is the government to stop it?

One of the reasons that governments are less likely to stop it nowadays – and even are more likely to encourage it – is because the governments can benefit. The commercial casino sector in the United States, which does not include Indian reserves, raked in $35.64 billion in revenues last year while the Las Vegas strip led the way with $6.07 billion. Those revenues are all taxable, which means it's a big piece of pie for the government to bite into.

As it stands right now, there is plenty of online gambling that happens – particularly on sports betting and poker – but it all takes place via offshore companies. It mostly happens under the table; the government doesn't regulate or tax it. If the regulations were changed and the government allowed it, then the government would also be able to tax it.

Plenty of state governments need help balancing their budgets these days. While jobs are tough to create, online gambling seems to be one sector that is untapped. A slew of tech jobs could be opened up as well as many more for operators and software developers. Throw in billions of taxable dollars and it sounds like a win-win situation.

Legislation has already started to shift in that direction with Delaware, California, and New Jersey hoping to legalize many online gambling activities by the end of the year. We'll see if the other states – and the federal government – then follow suit.

Twitter: @Inspin

Editor's note: This article originally appeared on
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