Sports and Internet Gambling: A Friendly Wager or a Threat to the Integrity of the Game?

Abstract

This paper aims to explore the tax revenue implications of legalizing sports gambling. Due to the very nature of sports gambling, the state will likely only retain, at a maximum, 5% of all bets wagered, while state gaming win may vary from year to year (AGA.) We believe that the rise in popularity of legalized sports gambling will create sufficient revenue for the states, as gamblers leave risky illegal establishments and offshore casinos. We will trace the recent history of sports gambling in the US as well as examining the clash between New Jersey and the Sports leagues over this issue. The paper will also show the connection between Internet and Sports gambling especially as it pertains to producing revenue for states. Finally we will discuss the social costs of sports gambling, which includes bankruptcy, addiction, and the tampering of sporting events. The paper will develop an appropriate framework to administer and run sports gambling operations in the new legalized states that best utilizes sports gambling operation and minimizes social costs.

Keywords: Sports, gambling, revenue, internet

JEL Classification: M10, M14, M19