Jan 2, 2019

Taxing sin industries isn't the solution to state budget shortfalls

Axios

The sin industry may be shining during a renewed period of government leniency, but don't expect legal weed and sports gambling to emerge as major revenue sources for cash-starved states.

The big picture: "The expected stampede of states seeking to legalize [sports gambling] has parallels to the growing trend toward legalizing recreational marijuana, which 10 states have done and others are considering," AP notes.

"In Nevada, revenue from sports betting has accounted for roughly one half of 1 percent of the entire state budget."
In New Jersey, the gaming industry took "$928 million worth of sports bets. ... The state received less than $8 million in tax revenue."
"Even Rhode Island, which has the highest sports betting tax rate at 51 percent, estimates it will take in $23.5 million a year, or a quarter of 1 percent of the state’s budget."
Legal weed in Colorado and Washington provides 2% and 1% of state revenue, respectively, AP notes.

The bottom line: "Baye Larsen, who analyzes state finances at Moody’s, expects sports betting to account for a 'very, very small slice' of state revenue and will do little if anything to help cover their rising pension, Medicaid, education or infrastructure needs."

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Taxing sin industries isn't the solution to state budget shortfalls

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