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Regulating Underground Industry: An Economic Analysis of Sports Betting

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  • Jonathan A. Schwabish

Abstract

Estimates suggest that up to $380 billion is illegally gambled on sporting events every year. This paper estimates the potential tax revenue the United States could collect if it acted as the legal operator of two separate types of sports betting games. Building on previous work the basic calculations suggest that by operating a legal head-to-head sports betting operation, the U.S. could generate anywhere from $977 million to $24 billion annually in tax revenue while a parlay card-type game could generate between $189 million and $1.4 billion. This paper is one of the first to calculate the potential revenues from legalizing this underground industry.

Suggested Citation

  • Jonathan A. Schwabish, 2005. "Regulating Underground Industry: An Economic Analysis of Sports Betting," New York Economic Review, New York State Economics Association (NYSEA), pages 65-77.
  • Handle: RePEc:nye:nyervw:v:36:y:2005:i:1:p:65-77
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    References listed on IDEAS

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    6. Beetsma, Roel M W J & Jensen, Henrik, 1998. "Inflation Targets and Contracts with Uncertain Central Banker Preferences," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 30(3), pages 384-403, August.
    7. Madhusudhan, Ranjana G., 1996. "Betting on Casino Revenues: Lessons From State Experiences," National Tax Journal, National Tax Association, pages 401-412.
    8. Donald Siegel & Gary Anders, 2001. "The Impact of Indian Casinos on State Lotteries: A Case Study of Arizona," Public Finance Review, , vol. 29(2), pages 139-147, March.
    9. Madhusudhan, Ranjana G., 1996. "Betting on Casino Revenues: Lessons From State Experiences," National Tax Journal, National Tax Association, vol. 49(3), pages 401-12, September.
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