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  • Elizabeth Ricardo

Sports Betting: A Home Run or a Strikeout?


Courtesy of Variety


For avid sports fans, there are few things that could beat the feeling of watching your favorite team win a pivotal game or, better yet, the season championship. While basking in the glory of being a supporter of the winning team, there is also the possibility of being rewarded a monetary bonus. This feeling of euphoria and excitement is the one that many sports bettors chase as they place bets on final scores, side wagers on their favorite players, or combine multiple speculations into what is known as a parlay


This widely sought-after exhilaration (or the gut-wrenching opposite) is being experienced by an increasing number of Americans. After the US Supreme Court struck down a ban on state-authorized sports betting on May 14, 2018, 38 states and Washington D.C. authorized this controversial practice with the intent of raising tax revenue. 

     

According to the National Council on Problem Gambling (NCPG), America is experiencing the largest and fastest gambling expansion in its history. This increase is largely due to easier access to mobile sports betting made possible by companies such as DraftKings, FanDuel, and BetMGM. The American Gaming Association (AGA) reported that the number of Americans open to placing sports bets has grown by 24 million since 2019. To relate this increase to a monetary figure, during the first quarter of 2023, Americans wagered $31.11 billion on sports. This figure is a 15% increase compared to the same period in 2022. The sports betting industry is currently valued at $7.5 billion and is projected to grow to $182 billion by 2030. 

   

Sports betting is a bit more complicated than just making a prediction about a game and naming a price. When an individual places a bet, they are charged a fee that is referred to as either a “vigorous,” “vig,” or “juice.” This fee is comparable to the brokerage fee that stock portfolio managers charges when they manage someone’s investment portfolio. This “vig” is returned to the individual if they win a bet. If they lose, however, the sportsbook keeps that “vig” as profit. 


Bettors can bet on all major sports: football, baseball, basketball, hockey, golf, tennis and combat sports. The odds in US based sportsbooks provide American odds. These use positive (+) and negative (-) odds to show how much a bettor could win with each successful bet and serve as an indicator for how much they will have to bet to receive that reward. For example, if the Boston Red Sox have a +400 odds to win the World Series, a $100 bet would earn $400 if they win. The (+) indicates that the Red Sox are the underdog as compared to their opponents, and would result in a larger payout as compared to if the favorite (the team with the [-] or lower number following the [+] sign) were to win. If the bettor wins, it takes an average of two to five days for winnings to be added to their bank account when using an online sportsbook.

    

Former Massachusetts Governor Charlie Baker signed sports betting into Massachusetts law on August 10, 2022. Retail sports betting (betting that takes place in a brick and mortar location) began on January 31, 2023; mobile and online sports betting followed on March 10, 2023. In the eight months that followed, Massachusetts collected $60.26 million in tax revenue and became the second highest per capita handler of any legal state after New Jersey. 


The Massachusetts legislature settled on a 15% revenue tax for retail sportsbooks and a 20% tax on online sportsbooks. In addition to the revenue tax, online operators are required to pay a $5 million licensing fee for five years. If all eight retail and seven online authorized sportsbooks are approved for five years, they will generate $75 million in revenue for Massachusetts. These licenses will need to be approved again in 2028, leading to more money for the state. This money will allegedly be reinvested in public services, workforce training funds, public health and youth development. 


While the benefits that state’s receive are seemingly plentiful, the same can’t be said for the taxes of an individual bettor? In the state of Massachusetts, there is a flat tax of 24% on all profits earned through sports betting. Bettors only pay this rate if they end the year in profit, and they are required to declare your winnings if they amount to over $600 or if the odds of your win were 300 to 1 or greater. These wins are reported to the IRS as taxable income. Additionally, gambling losses are to be deducted on your Schedule A. 


However, since the 2017 tax overhaul, few filers have actually itemized their deductions. This could leave many casual gamblers in the position of having their winnings taxed and their losses considered to be non-deductible. When filing taxes, a bettor cannot simply subtract their losses from their gains, they must report both their losses and gains to avoid a possible conflict that could result in an IRS audit. If a bettor is still classified as a dependant on their parents’ tax reports, the dependant will likely also have to file a return, and their winnings may even be taxed at their parents’ rate. 


Beyond the complicated tax filings associated with sports betting, there is another major potential consequence: addiction. The American Psychiatric Association defines a gambling disorder as a repeated problem-gambling behavior that is commonly linked with depression, anxiety, and suicide. The NCPG estimates that gambling addiction rose 30% between 2018 and 2021, with those most at risk being men between the ages of 18 and 24. The average debt generated by such a disorder-afflicted man averages between $55,000 and $90,000. 


To try to combat this crippling addiction, FanDuel and DraftKings allow customers to set limits on the deposits, wagers, and time spent on their app. However, there is no data collected on the efficacy of these preventative measures. 


Clearly, sports betting is beneficial for states to increase the amount of revenue that they generate. This increased attention on sports betting has likely added to the overall excitement and already-great stakes that exist for sports players and teams alike. If bettors are profitable, they are likely to enjoy a performance high similar to the one their favorite athletes experience after a win. For the losers, however, there is seemingly much more at risk than just the outcome of a single game. 


1 則留言


Veronica Hope
Veronica Hope
6月18日

The article explores the growing trend of sports betting and its potential impacts. It provides a balanced view on whether sports betting is a home run or a strikeout for the economy and society. As this industry expands, the role of effective marketing strategies, including casino SEO, becomes increasingly important. Properly optimizing online presence can help casinos attract more customers and stay competitive. The article emphasizes both the opportunities and challenges of sports betting, making it clear that while it can drive significant revenue, it also requires careful regulation and responsible practices.

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