Since the U.S. Supreme Court’s 2018 ruling in Murphy v. NCAA overturned the federal ban on sports betting, the industry has exploded. What was once limited to Nevada is now a nationwide phenomenon — and the tax implications are just as significant as the bets themselves.
Where Things Stand Today
40 states and Washington, D.C. have now legalized some form of sports betting, with 30 allowing online wagers. Since 2018, states have collectively raised over $2.8 billion in tax revenue from the industry.
The Tax Angle
How states tax sportsbook revenue varies dramatically — and those choices have real consequences for state budgets.
- High-tax states like New York, New Hampshire, Oregon, and Rhode Island impose rates as high as 51% on sportsbook revenue
- Low-tax states like Nevada, Iowa, Michigan, and Indiana keep rates under 10%
- Medium-tax states (10–20%) include Arizona, Colorado, Kentucky, Louisiana, Maryland, Virginia, and others
Federal vs. State Policy
The passage of the One Big Beautiful Bill Act (OBBBA) introduced new federal rules around gambling income that have analysts watching closely. Some warn that these changes could reduce the effectiveness of state-level tax collections, adding another layer of uncertainty to an already complex landscape.
The Takeaway
Legal sports betting has opened up significant tax revenue for states — but it’s far from a uniform system. With high-rate states chasing maximum revenue and low-rate states prioritizing market competitiveness, the landscape is as unpredictable as the games themselves. Have questions about how gambling income affects your taxes? Contact us at 708-665-6663 or marketing@4wealthfg.com. Or, visit 4wealthadvisors.com/get-in-touch to fill out our contact form.