Recently, the Supreme Court struck down a 1992 federal law aimed at prohibiting sports betting. The Court’s reason for ruling the law unconstitutional was that rather than making sports betting illegal, the law prohibited states from allowing it. In essence, the law only served to dictate what states could and could not do. This violates the tenth amendment, or what is commonly called the “commandeering clause.” The ruling does not immediately make sports betting legal; however’ it allows states, including Arizona, to do what they like on the matter.
It has been interesting to hear how the many different parties have reacted to the ruling. While I believe all sports organizations are concerned about the integrity of games, some are looking for ways to profit off the ruling. From what I have read and heard, the NBA and MLB have been pushing for some sort of gambling revenue to come their way. The term “integrity fee” has been thrown out frequently. Other organizations such as casinos and racetracks around the nation are also starting to set up the framework to capitalize on the ruling.
Wait, how does this have anything to do with taxes? This is a tax blog. Well, some states are looking to capitalize on the ruling too. Many of the proponents to legalizing sports betting point out that while illegal, sports betting still occurs. Bringing it out of the dark would allow states to bring in more tax revenue as a result. Several states are moving forward with legalizing sports betting. It will be interesting to see how the different states react to the ruling, if they pass laws allowing sports betting and what difference it makes on state budgets.