Regulating Underground Industry: An Economic Analysis of Sports Betting

Jonathan Schwabish

New York Economic Review, 2005, vol. 36, issue 1, 65-77

Abstract: Estimates suggest that up to $380 billion is illegally gambled on sporting events every year. This paper estimates the potential tax revenue the United States could collect if it acted as the legal operator of two separate types of sports betting games. Building on previous work the basic calculations suggest that by operating a legal head-to-head sports betting operation, the U.S. could generate anywhere from $977 million to $24 billion annually in tax revenue while a parlay card-type game could generate between $189 million and $1.4 billion. This paper is one of the first to calculate the potential revenues from legalizing this underground industry.

Date: 2005
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