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Regulating Underground Industry: An Economic Analysis of Sports Betting

  • Jonathan A. Schwabish
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    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.

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    Article provided by New York State Economics Association (NYSEA) in its journal New York Economic Review.

    Volume (Year): 36 (2005)
    Issue (Month): 1 ()
    Pages: 65-77

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    Handle: RePEc:nye:nyervw:v:36:y:2005:i:1:p:65-77
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    1. Charles T. Clotfelter & Philip J. Cook, 1989. "Selling Hope: State Lotteries in America," NBER Books, National Bureau of Economic Research, Inc, number clot89-1.
    2. 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.
    3. Guido W. Imbens & Donald B. Rubin & Bruce Sacerdote, 1999. "Estimating the Effect of Unearned Income on Labor Supply, Earnings, Savings, and Consumption: Evidence from a Survey of Lottery Players," NBER Working Papers 7001, National Bureau of Economic Research, Inc.
    4. Melissa S. Kearney, 2005. "The Economic Winners and Losers of Legalized Gambling," NBER Working Papers 11234, National Bureau of Economic Research, Inc.
    5. Earl L. Grinols & David B. Mustard, 2005. "Business Profitability and Social Profitability: Evaluating Industries with Externalities, The Case Casinos," Law and Economics 0509001, EconWPA.
    6. Oster, Emily, 2004. "Are All Lotteries Regressive? Evidence from the Powerball," National Tax Journal, National Tax Association, vol. 57(2), pages 179-87, June.
    7. 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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