The House Always Wins: States Cash-in on Sports Betting

As of July 2025, 38 U.S. states and the District of Columbia have legalized sports betting in some form—either online, in-person, or both. This expansion follows the Supreme Court's 2018 decision to overturn the previous federal ban on sports wagering, allowing individual states to regulate the activity. Virtually all states that have legalized sports betting impose taxes on the industry, although the tax structures and rates vary significantly. Most state taxes are applied to the gross gaming revenue (GGR) of sportsbooks—the total amount wagered minus winnings paid out. Some states also implement additional fees or taxes per wager. To illustrate, New York imposes a 51% tax on online sports betting revenue, which is one of the highest rates in the country. In contrast, Nevada maintains a relatively low tax rate of 6.75% on sports betting revenue while Tennessee imposes a 1.85% tax on the total amount wagered (handle), rather than on revenue.

Read now »

Related Content

• Excise Taxes on Wagering
  Learn how I.R.C. Chapter 35 imposes excise taxes on gambling or “wagering.” Federal excise taxes apply to wagers accepted in any state, presumably since gambling provides valuable tax revenue. Common forms of gambling include card rooms, commercial casinos, charitable games and bingo, Indian casinos, legal bookmaking, lotteries, and pari-mutuel betting. The American Gaming Association (AGA) estimates that, in 2023, casino gaming alone had an economic impact of over $328 billion and yielded nearly $52.7 billion in tax revenues.

Practical Guidance Updates 
Featuring the latest updates from your Practical Guidance account.     

• Tax Key Legal Developments Tracker (Federal) (Current)—keep up to date with key legal developments!
  • Federal Tax Legislation. President Trump signs the One Big Beautiful Bill Act (OBBBA), HR 1, on July 4, 2025. Federal Tax Legislation Tracker (2025).
  • Business Entities. IRS provides various prescribed rates for federal income tax purposes for July 2025 (the current month).  Rul. 2025-13.
  • Business Entities. IRS provides guidance on the corporate bond monthly yield curve. I.R.S. Notice 2025-35.
  • Tax Practice, Procedure, and Controversy. Trump Administration issues an executive order, Ending Market Distorting Subsidies for Unreliable, Foreign‑Controlled Energy Sources, which calls for Secretary of the Treasury to take necessary and appropriate action to strictly enforce termination of the clean electricity production and investment tax credits under I.R.C. sections 45Y and 48E for wind and solar facilities to ensure that policies concerning the “beginning of construction” are not circumvented, including by preventing the artificial acceleration or manipulation of eligibility and by restricting the use of broad safe harbors unless a substantial portion of a subject facility has been built.
  • Tax Practice, Procedure, and Controversy. IRS issues guidance in the name of tax administrative simplification by eliminating 83 guidance documents it has identified as unnecessary. The elimination implements President Trump's executive orders for government agencies to deregulate and improve government efficiency. R.S. Notice 2025-36. 
• Document alerts allow you to stay current on legal developments that affect your practice. Find out how to set up your document alerts.
• What’s New in Practical Guidance
  Discover the newest Practical Guidance content and resources in  this update. This guide is designed to help you find the tools and insights you need to work more efficiently and effectively.
• Keep current on Trump administration developments by referencing the Presidential Executive Actions Tracker, Legal Challenges to 2025 Presidential Executive Orders and Actions Tracker, Executive Orders, EEOC Letters, and Other Actions Concerning Law Firms Tracker, and Trump Transition Resource Kit.
• New! Practical Guidance Journal, 2025 Second Edition features guidance for regulating AI in the workplace in 2025, Intellectual Property issues related to deepfakes, the emergence of AI in mergers and acquisitions, and a checklist to help when evaluating AI technology risks.
• Browse the Practical Guidance Author Center to see the 2600+ leading attorney authors contributing to our 26 practice areas. Interested in becoming a Practical Guidance author? Click here for details. Practical Guidance is committed to amplifying diverse voices of attorneys across all differences, including gender and race.
• Legal Developments provide the latest updates and analyses of emerging topics impacting your practice area. Visit the Legal Developments page to see the latest topics, which also include breaking legal news and related Practical Guidance content. 

• New and Recently Updated Practical Guidance Content
  • Private Activity Bonds and Exempt Facility Bond Qualifications: R.C. Section 142
  • Purchases and Sales of Disregarded Entities: Tax Considerations
  • Tax Credit Transfer Agreements: Common Negotiating Points
  • Tax Provision Negotiation in a Stock Purchase Agreement (C Corporation Target)
  • Type A Reorganizations
  • Multistate Corporate Audit Issues State Law Survey
  • Corporate Franchise Taxes State Law Survey
  • Telecommunications Taxes State Law Survey
  • Senior Citizen Tax Benefits State Law Survey
  • How Energy Cos. Can Prepare For Potential Tax Credit Cuts
  • KPMG Reports: Tax Subtitle for One Big Beautiful Bill
  • One Big Beautiful Bill Act Tax Proposals: Select Highlights and Implications

PRACTICAL GUIDANCE CUSTOMER EMAIL EDITION ON THE WEB

Experience results today with practical guidance, legal research, and data-driven insights—all in one place.

Experience Lexis+