It is that time of the year again, March Madness.
March Madness is one of the most widely gambled events in the United States, just think about all the people who fill out a bracket even if they have never watched a college basketball game all year.
Stats published by American Gaming Association (AGA) show that 70 million brackets will be completed, with a total of 10.4 billion bet on the outcome of the games. However, only 295 million of those bets will be placed legally in Nevada, this means 97% of the bets are placed illegally. (Source)
The AGA is making the most of March Madness this year by trying to highlight the “antiquated” federal law that prohibits sports betting. The law that the AGA is referring to it the Professional and Amateur Sports Protection Act (PASPA). This was passed in 1992 and dealt with land-based sports betting, it applied to all states except Nevada, Delaware, Montana, and Oregon, which were grandfathered in under the immunity clause. (Source)
Recently, New Jersey and Michigan are two states that have tried to legalize sports betting through court battles.
Should the government look at changing this law that many consider outdated? Currently, if you win there is a 25% “federal withholding tax” and there are also multiple other levels of winning that must be reported to the IRS. Specifically, if you win at least 300 times your bet at the track and the payoff is $600 or more it must be reported to the IRS, this is likely representative of what many could expect to pay if sports betting becomes legal. (Source)
Now applying that 25% to the numbers reported by the AGA would mean close to 2.6 billion dollars in tax revenue collected. Maybe it is time to legalize sports betting.