Commercial gambling is now legal in 48 states—Utah and Hawaiʻi are the only exceptions—making gaming a major source of public revenue. The predominant forms of state-sanctioned gambling are lotteries and casinos:
Beyond these, an increasing number of states permit machine gaming outside of traditional casinos and legalized wagering on live sporting events. While lottery revenues have softened in several jurisdictions, overall gaming remains a robust fiscal contributor: state and local governments collected $35 billion in gaming related revenue in fiscal year 2021, and total gaming receipts are projected at $71.9 billion in 2024.
States use lottery and gaming revenues to fund a variety of public programs and services, including education and economic development, and as a supplement to general funds. Many states also employ a portion of gaming revenue to counteract the negative effects of gaming. Out of 24 states with commercial gaming, 23 fund treatment and research on gambling addiction. The National Council on Problem Gambling estimates that 2.5 million (1%) of adults are estimated to have a severe gambling problem and another 5-8 million (2 to 3%) are considered to have a mild to moderate gambling problem.
Several states earmark lottery and gaming proceeds to support the arts. In FY2025, seven state arts agencies received these revenues—on average covering about 15% of their total state funding. Lottery and gaming revenues now underpin a substantial portion of some agencies’ budgets—accounting for 14% to 62% of state funding in Iowa, Kansas and West Virginia—while playing a much smaller role in Wisconsin (1%) and Maryland (3%). The most recent adopters are Oregon, which began directing lottery proceeds to arts and culture in 2020, and Massachusetts, where casino gaming revenue has funded the arts council’s performing arts grants since 2021.
For more information and detailed data on lottery or gaming taxes or other dedicated revenue strategies, contact NASAA Research Manager Nakyung Rhee.
| Colorado Mechanism: Gaming Tax Statute: CO Rev Stat § 12-47.1-701 All revenues generated from the gaming tax, along with license and application fees, are placed in the Limited Gaming Fund. Annually, $2 million has been allocated to Colorado Creative Industries through the creative industries cash fund. The allocation from the Limited Gaming Fund was temporarily suspended during FY2019-2020 but has been reinstated since FY2021, now serving as baseline funding for the agency’s operations and initiatives. |
| Iowa Mechanism: Gaming Tax Statute: Iowa Code §99F.11 Revenue from a tax imposed on authorized gambling is appropriated each fiscal year to the Department of Cultural Affairs, with one-half of the funds allocated for operational support grants and the remaining one-half allocated for the community cultural grants program. |
| Kansas Mechanism: Lottery Tax Statute: K.S.A. 79-4804 Eighty-five percent of state gaming revenue goes to the state economic development initiatives fund. This fund is designated for programs and projects that contribute to economic development in Kansas, including the Creative Arts Industries Commission. |
| Maryland Mechanism: Admissions and Amusement Tax Statute: Article – Tax – General §2–202 Five percent of the revenue from taxes levied on electronic bingo and electronic tip jars is distributed to the Special Fund for Preservation of Cultural Arts in Maryland (up to $1 million), with the remainder allocated directly to the Maryland State Arts Council. |
| Massachusetts Mechanism: Gaming Tax Statute: MGL Section 59, Chapter 23K The Massachusetts Expanded Gaming Law imposed a 25% tax on gross gaming revenue, of which 2% is allocated to Massachusetts Cultural Council to mitigate a direct threat to the sustainability of nonprofit and municipal performing arts centers. Mass Cultural Council administers the Gaming Mitigation Program, established by MGL Section 59, Chapter 23K, at the direction of the state legislature. |
| Oregon Mechanism: Lottery Bonds Statute: 461.010, et seq.; Art. XV §4 Oregon Constitution In the 2019-2021 legislative session, Business Oregon received $10 million in tax-exempt lottery bond funds. The first bond issue provided $5 million in funding in spring 2022, with the remaining $5 million available in spring 2023. Each biennium, 10 to 15 Oregon Arts Commission projects will be funded through state lottery bonds. Lottery bonds are unavailable until the end of the biennium, and are subject to specific restrictions and permitted expenditures. |
| West Virginia Mechanism: Lottery Tax Statute: §29-22-18 The West Virginia Commission on the Arts receives a portion of a lottery tax through funds dedicated to the Education, Arts, Sciences and Tourism Debt Service Fund. |
| Wisconsin Mechanism: Tribal Gaming Tax Statute: 14.035 The state of Wisconsin has entered into gaming compact agreements with tribal nations as permitted by the Indian Gaming Regulatory Act of 1988, 25 U.S.C. §2701. Revenue from tribal gaming had been used to fund state agency programs since FY2000. |
American Gaming Association, Commercial Gaming Revenue Tracker, 2025
Urban-Brookings Tax Policy Center, How Do Taxes on Lotteries, Casinos, Sports Betting, and Other Types of State-Sanctioned Gambling Work? 2024
Stateline, State Lotteries Fight ‘Jackpot Fatigue,’ Casino Competition, 2017
The Nelson A. Rockefeller Institute of Government, State Revenues from Gambling: Short-Term Relief, Long-Term Disappointment, 2016
National Council on Problem Gambling, Responsible Gaming Resources, 2023; National Problem Gambling Helpline Network Fact Sheet