Home Taxes on Legalized Gambling The Controversy of the Legalization of Gambling

The Controversy of the Legalization of Gambling

The controversy surrounding the legalization of gambling has been a topic of debate for decades. While some see it as a way to increase revenue and job opportunities, others argue that it has negative consequences on individuals and society as a whole. In this article, we will explore both sides of the argument and provide updated information on the topic using government resources.

The Positive Side of Legalized Gambling

Proponents of legalized gambling argue that it has numerous benefits for society. One of the main arguments in favor of it is that it could generate revenue for states and local governments. According to the American Gaming Association, the commercial casino industry alone generates $52 billion in economic impact every year and supports over 1.7 million jobs across the country.

Moreover, some argue that the taxation of gambling revenue would provide a much-needed source of revenue to cash-starved governments. Take for example, the state of Nevada, which generated $797.5 million in tax revenue from gambling in 2020.

In addition, proponents of legalized gambling argue that it can create job opportunities, particularly in more rural areas, where there may be fewer employment opportunities. For example, new casinos and betting shops create jobs in positions such as dealers, cashiers, and security staff.

The Negative Side of Legalized Gambling

Despite these potential benefits, many argue against the legalization of gambling. One of the main concerns is the potential for gambling to become addictive. In 2019, an estimated 3.5 million Americans had a gambling disorder, according to the National Council on Problem Gambling.

Gambling addiction can have serious consequences, including financial hardship, strained relationships, and even suicide. According to a study by the University of Louisville, individuals with gambling problems are more likely to experience depression, anxiety, and other mental health issues.

Furthermore, some argue that the legalization of gambling leads to an increase in crime rates in surrounding areas. This can include crimes such as theft, fraud, and embezzlement, as well as more serious offenses like money laundering and organized crime.

Finally, the social costs of gambling cannot be ignored. Families can be torn apart by the addiction of a loved one, and communities can suffer from increased rates of poverty and homelessness as a result of gambling.

Government Policies on Legalized Gambling

Despite the potential risks of legalizing gambling, the federal government has largely taken a hands-off approach, leaving the decision to individual states. Currently, only a handful of states have outright bans on gambling, while others have allowed various forms of regulated gambling, such as casinos, lotteries, and sports betting.

In 2018, the United States Supreme Court struck down a 1992 federal law that outlawed sports gambling in most states. This decision paved the way for states to legalize sports betting, which has since been legalized in 25 states and D.C., according to ESPN.

In 2020, Illinois became the 16th state to legalize sports betting, which immediately generated $17 million in tax revenue and created hundreds of new jobs.

Conclusion

The controversy surrounding the legalization of gambling is not likely to be resolved anytime soon. While there are certainly potential benefits to gambling, such as job creation and increased revenue for state and local governments, there are also serious risks, such as addiction and increased crime rates.

It is up to individual states to decide whether or not to legalize gambling, but it is important to be aware of the potential consequences and to consider the impact on individuals and communities before making a decision. It remains up to policymakers to strike a balance between the potential benefits and risks of legalized gambling.


In states that allow legalized gambling, the tax revenue generated far surpasses that of most other taxes. Currently, there are only two states that do not allow for legalized gambling. Although the reasons are different, neither state enjoys the benefits of a gambling tax revenue. New Jersey taxes lottery winnings at a rate of eleven percent.

New Jersey also has legal casinos which generated three and a half million dollars in tax revenue in 2008. That tax revenue is used for a variety of taxpayer resources. Without those taxes, and the jobs at the casinos, New Jersey would likely have a larger budget deficit than what it is currently experiencing.

There are many arguments against legalized gambling. For example, there is the argument that legalized gambling supports organized crime and other violent crime. However, the revenue generated form gambling can pay for increased law enforcement, and also provides jobs which can prevent high unemployment rates.

The reduction in unemployment has been directly correlated with a reduction of violent crimes in cities like Atlantic City, which has had legalized gambling since 1978. In 2008, over thirty five thousand people were employed by Atlantic City Casinos. Those employees had a total salary of over one billion dollars. Those employees helped New Jersey to rake in over three and a half million dollars in tax revenue from the gambling tax alone. If online gambling becomes legal, those numbers would be expected to rise sharply.

While online gambling sites may not provide as many jobs as casinos do, the gambling tax revenue would far outweigh that of casinos. Studies of online gambling and resulting statistics, indicate that states like New Jersey would likely enjoy a gambling tax revenue of at least double the currentrate. Many online gamblers avoid casinos simply to avoid the gambling tax.

However, online gambling could also be detrimental to society. The anonymity associated with gambling online allows gamblers to feel more confident because nobody is watching. Online gamblers are likely to spend more money than those in a casino. The entire process of legalizing and taxing online gambling, could also be extremely difficult to implement. Gamblers could gamble on public computers, making their identities difficult to trace. Online gambling may actually encourage tax evasion because of the simplicity of avoiding identification when online.

The debate for legalizing gambling in any form, has raged for years. Online gambling presents a new set of issues associated with the debate. The tax revenue that could be generated form an online gambling tax, would certainly cover the issue of implementation. However, compliance with the laws could be difficult to enforce, especially when most online casinos are located outside of the United States.