If you love watching sports, it’s practically a given that you’ve seen an advertisement for sports betting in the last few years. The emerging market has taken the United States by storm as people rush to try their luck at winning big by betting on the games they love.
At face value, it’s an incredibly easy pastime to get into: that’s what makes it so successful. All you have to do is download your app of choice, follow the prompts, and within a minute or two you can bet on any game you please.
Just because it’s easy to get involved in doesn’t mean it’s a simple industry. In fact, it’s incredibly complicated, especially when you get into the factors that make it tick, such as the various laws that regulate the industry. Here’s a look at how those work, from the impact they have on betting operators to the average consumer, like yourself.
Licensing Law in Sports Betting
After all the hype surrounding gambling legalization, it likely seems frustrating to consumers when they have to wait for months on end — or years, in some cases — to be able to start placing wagers once their respective states vote to legalize the pastime.
Believe it or not, state governments aren’t sitting around and wasting time during the layover period, though. Revenue committees have to be established to project how the new industry will impact the state economy, what rate they want to tax consumers and corporations at, and how they want to distribute the tax dollars collected.
They also have to figure out how to regulate the industry, setting standards for betting platforms like casinos and sportsbooks to adhere to and checks to make sure that they’re in compliance.
Betting platforms have to apply for their licenses before they can start fielding wagers, showing their ability to conduct business in an ethical manner, and they often have to pay a licensing fee as well.
Many of these requirements have deadlines that ensure betting will go live at a time that is financially advantageous, like the start of the new fiscal year or a big event like the Super Bowl.
Consider ESPN BET as a prime example of the latest entrants into the betting platform arena. They have strategically chosen to launch their platform around Thanksgiving, capitalizing on the football frenzy that the holiday season brings. To kick off with a bang, ESPN Bet will roll out enticing promotions, including exclusive ESPN Bet Ohio Promo Codes. These codes promise to be a game-changer for Ohio-based bettors, enhancing their wagering experience on this exciting platform..
Gambling Tax Laws
Now that that’s out of the way, let’s take a look at the factor that is most likely to have an impact on consumers: tax law. How your gambling winnings (or losses) get taxed depends on where you live and how much you earn. At the federal level, earnings are taxed at a 24 percent clip.
If you win a certain amount of money — typically above $5,000 — you’ll automatically receive a Form W-2G in order to report your earnings when Tax Day rolls around, or you may even have taxes deducted automatically. Win a smaller amount, though, and you may not receive that handy form… but you’ll still have to pay taxes nonetheless, making this very important to keep in mind.
If you don’t want a surprise visit from the IRS, make sure to keep track of the money you win, and make sure to report and pay the requisite tax amount.
On the other hand, gambling losses factor into the picture too. No one likes to lose a bet, but it’s sort of inevitable if you’re taking part in the gambling industry. Just as you pay taxes on winnings, you can write off your losses, deducting them from your total taxable earnings in the same way that you would other expenses.
State Tax Rates
State tax laws vary depending on where you live, with most states counting gambling winnings alongside the rest of your income. This means that the amount you win or lose could actually end up changing the tax bracket you fall into. Again, it’s incredibly important to keep track of all the transactions you make to save yourself from any unexpected sticky situations.
State tax laws matter even more to betting operators, as the rates at which a corporation is taxed can vary between a whopping 51 percent, like in New York, all the way down to the single digits in states like Nevada. Funnily enough, those tax rates haven’t seen to impact gambling operators yet, as the Empire State set a record for betting handle in 2022 even with the state government skimming the till.
