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.