As a long-time casino sports book industry executive, I am amazed by the exuberance of the gaming media and my professional associates regarding the possible repeal of the Professional and Amateur Sports Protection Act of 1992 (PASPA). It is now commonly believed that the Supreme Court will vote in favor of the legalization of sports betting in New Jersey. Although legalization is long overdue, the real heavy lifting has yet to begin.
Assuming that New Jersey and all other states will be permitted to enact sports betting legislation, we must speculate as to how each state and municipality will tax this new revenue stream. The current version of New Jersey’s Gaming Accountability and Modernization Enhancement Act of 2017 does not provide a proposed tax rate. However, New Jersey casinos currently pay 9.25 percent tax on gross gaming revenues, and their online casinos pay a 15 percent tax rate. I would have to assume that New Jersey would like to make a larger percentage of taxes from sports book revenues. Nevada sports books pay about 6 percent of their revenue in state taxes and a federal tax of 0.25 percent of handle. Nevada is a friendly environment to conduct business. Illegal bookmakers are not a problem in Nevada because the legal bookmakers offer a competitively priced product, pay timely, and are subject to stringent regulations. Nonetheless, the sports book industry is a very tough area to succeed because of its low profit margins.