What’s the significance?
Opponents argue that local officials view gambling taxes as lucrative revenue streams and fail to consider the actual cost.
- The states of 38 have been legalized since the court case in 2018
- Calls to addiction hotlines increase
- Amount of $500 million from sports betting each quarter for states
Los Angeles – Asher first went to the Gamblers Anonymous gathering in 2022; just around a dozen people attended, but today, more than 60 turned up, with the majority of newcomers struggling with addiction to sports betting online.
Asher, who demanded that Context employ a pseudonym to ensure the confidentiality of members of the group he was recovering from, was enticed to gamble through online poker.
“It is just so easy to open these gambling accounts online,” he said to Context/the Thomson Reuters Foundation. “At one point I lost over $500,000 to this addiction and almost lost my family.”
Dr. Timothy Fong, co-director of the Gambling Studies Program at UCLA Clinics, used to be overflowing with elderly patients with a history of losing their money in casinos or who were addicted to gambling machines.
These days, it’s young men who are hooked on gambling online or risky cryptocurrency, as well as stock trades as well as, increasingly, sports betting on the internet.
“Everything has changed,” the man said. “We are in the second inning of a gambling crisis. We don’t know … if it could be an opioid-crisis level.”
In 2018, the U.S. Supreme Court transformed internet gambling by striking down a nationwide ban on betting on sports.
Since then, 38 states and the District of Columbia have legalized sports betting, according to the American Gaming Association, an industry-based group that brought an estimated 11,000 billion dollars in profits to the industry this year.
According to Richard C. Auxier, the principal policy associate of the Urban-Brookings Tax Policy Center, a think institute, taxing these new revenue streams appeals to city and state officials dealing with the post-pandemic economic turmoil.
“You’ll hear people say things like, ‘this will pay for schools’,” he added. “Politicians are purposefully saying, ‘we won’t need to raise property taxes!”
However, Auxier cautioned that governments tax businesses on their profits, which means the state only earns money after gamblers have lost.
“It’s not free money, it’s money from residents. And as this moves to phones, it’s coming from possibly addicted residents,” said the official.
Joe Maloney, a senior vice president of the American Gaming Association, cited studies conducted at the state level showing that “problem gambling” rates remained lower in certain states where online gaming was recently legalized.
“Responsible play is at the foundation of sustainable growth,” the president said.
Maloney stated that a properly regulated and legal business was accurately equipped to fight gambling addiction. “The industry does not have a vested interest in creating problem gamblers.”
“Significant” Revenue
The revenue from sports betting for the state government was more significant than $505 million in the third quarter of the year, a rise of 20% over the same time last year, the Census Bureau reported in February.
The tax rates on sports betting vary significantly, up to 51 percent in New York and Rhode Island.
In recent times, gambling revenues have been around 1 percent of the budgets for local and state governments. Auxier noted that the figure was significant.
However, like many other “sin taxes,” such as on cigarettes or alcohol gambling, revenue from these is a “twisted incentive” for local officials, according to Kamolika Das, the regional policy director for the Institute on Taxation and Economic Policy and think tank..
These taxes are typically partially intended to “deter consumption, but then that reduces the revenue,” she added, Noting that the growth from taxation on sin tends to be relatively weak.
“So enough localities are doing this as an immediate way to plug budget holes, but it’s not really a long-term solution,” Das explained.
The legalization of sports betting online typically leads to a rise in gambling addiction, as some experts have said. In the past, Florida saw calls to the helpline for gambling addiction double following the launch of an online sports betting application introduced within the state.
“Many people who call the helpline have gambling debt that’s more than twice their annual income,” said Keith Whyte, executive Director of the National Council on Problem Gambling.
The company operates a national helpline that witnessed more than double calls and text messages between 2020 and 2023.
Maloney, the gaming industry’s executive, said that the number of calls to helplines was not a precise measure of gambling addiction rates. It could be the result of a greater consciousness.
Security And Treatment
In Massachusetts, nonprofit organizations dealing with gambling issues for decades have been transformed by applications.
“You don’t have to get into your car, nobody is setting eyes on you, and you can constantly access gaming—these are huge concerns,” said Marlene D. Warner, Chief Executive Officer of the Massachusetts Council on Gaming and Health, which receives support from the State of Massachusetts.
The organization has been operating for years on-site experts to benefit those struggling with gambling issues in casinos. It now provides similar assistance via chat online, but Warner declared that more needs to be implemented to warrant that minors are kept out of betting apps.
Although Massachusetts has been praised for its hefty funding of its support services, holes persist in other states.
States set aside more than $100 million to address problems with gambling last year, almost all of it from taxes imposed on the gambling industry and the American Gaming Association.
Eight states favor no public-funded treatment for people with an addiction who gamble, According to the head of the NCPGC’s Whyte. “In enough states, you might just get six sessions of treatment – it’s just not sufficient,” the expert said.
The council is in favor of 2 percent of the revenue from gambling to be allocated to fund treatment programs. It estimates that the cost to society that gambling has in the United States is up to 10 billion dollars per year, which includes health and imprisonment expenses.
The council also advises states to establish 39 security standards for Internet gambling, such as deposit limits, tools that allow users to block certain applications, and direct hyperlinks for addiction benefits.
The industry has issued its “responsible advertising” standards in online sports betting. These include instructions for ads targeted at those over 21 and guidelines for clarifying that betting carries risk.
Many of the most prominent players have developed tools that let users establish betting limits or exclude them from applications, in addition to providing information on how to get benefits to treat addiction.
However, policymakers are increasingly recognizing the risks. In July, lawmakers from state legislatures came together in Pittsburgh to discuss the legislation regarding Internet gaming. The legislation is expected to be announced later this month.
Some believe that the growth of gambling online could provide new avenues for security.
“There are many elements online that change the game in terms of responsible gambling,” said Warner of the Massachusetts Council on Gaming and Health. This includes setting limitations on winnings and losses or the duration of play.
She said AI tools can also assess a person’s risk before it becomes problematic.
“That’s changing our world dramatically. If we can send a message to someone starting down a problematic path, whether by AI or people, that’s terrific.”
