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