Sports Betting, Lotteries, and State Revenues in the Post-PASPA Era

Joseph Nedved, David Nason, Adam Adam Hoffer, Amir Ferreira Neto and Brad Humphreys
Additional contact information
Joseph Nedved: West Virginia University
David Nason: Florida Gulf Coast University
Adam Adam Hoffer: Tax Foundation
Amir Ferreira Neto: Florida Gulf Coast University

No 26-05, Working Papers from Department of Economics, West Virginia University

Abstract: State lotteries are an important source of state revenue in the 45 states that operate them. Following the repeal of the Professional and Amateur Sports Protection Act (PASPA), 38 states and Washington, DC legalized sports betting. Prior evidence is mixed on whether sports betting and lotteries are substitutes, complements, or unrelated goods, raising concerns about potential fiscal impacts. Using monthly lottery sales data from 18 states and a difference-in-differences design exploiting staggered legalization, we find no economically or statistically significant effect of sports betting on state lottery revenues. These results are robust across specifications and sub-samples.

Keywords: Lottery Revenues; Sports Betting; Cannibalization; Gambling; State Revenue (search for similar items in EconPapers)
JEL-codes: D10 H71 Z20 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2026-02
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