Lottery and Gaming Taxes

Gambling revenues have become a significant source of public revenue, with commercial gambling now being legal in 48 states (Utah and Hawai’i are the two exceptions). The most common forms of state-sanctioned gambling are lotteries and casinos: 44 states and the District of Columbia have state lotteries, about half of the states have some form of commercial casino gambling, and gambling venues run by sovereign Indian tribes or nations are present in 29 states. An increasing number of states also allow machine gaming outside of casinos and wagering on live sporting events. Although lottery revenue has declined in many states, gambling and gaming remain significant contributors to public budgets, amounting to more than $27 billion in state and local government revenues.

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 use a portion of gaming revenue to mitigate the negative effects of gaming. Out of 24 states with commercial gaming, 23 fund treatment and research on gambling addiction. According to the National Council on Problem Gambling, 2 million (1%) of adults are estimated to have a gambling addiction and another 4-6 million (2-3%) are considered problem gamblers.

Some states also use lottery and gaming proceeds to fund the arts. Six state arts agencies receive funds from gaming revenues, comprising on average 39% of these agencies’ state funding in fiscal year 2018. These funds are significant sources of income for state arts agencies in Colorado, Iowa, Kansas and West Virginia and provide modest revenue in Wisconsin. In FY2016, Maryland started to receive revenue from the state’s admission and amusement tax (on electronic bingo and electronic tip jars).

 

States Receiving Funding from Lottery or Gaming Taxes

 

Sources:

The Council of State Governments, State Revenues from Gambling Shrinking, 2016.

National Conference of State Legislatures, Keeping State Lottery Revenue Alive, 2017.

The Nelson A. Rockefeller Institute of Government, State Revenues from Gambling: Short-Term Relief, Long-Term Disappointment, 2016.

Stateline, State Lotteries Fight ‘Jackpot Fatigue,’ Casino Competition, 2017.

American Gaming Association, Responsible Gaming Regulations & Statutes, 2016.

National Council on Problem Gambling, Responsible Gaming Resources.

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