Lottery and Gaming Taxes

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:

  • Lotteries: operated by 45 states plus the District of Columbia
  • Commercial casinos: available in roughly half of the states
  • Tribal gaming: 31 states host gaming venues run by sovereign tribal nations

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.

States Receiving Funding from Lottery or Gaming Taxes

 

Sources:

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