Sports betting has proven to be a curse and a blessing for U.S. states.

Lawmakers are paying attention to not just the revenue being generated from sports betting, but the rise in the number of problem gamblers. Two federal gambling bills have arisen in 2025 and several states are also looking at what is becoming a billion dollar gambling problem in America.

At the end of 2024 there were 38 states offering licensed and regulated sports betting either at a physical location, online, or both and that number could expand to 40 by the end of 2025. And the revenue from sports betting has been astounding. Here are some of the highlights according to reports for the 2024 calendar year:

 -- Approximately $150 billion was wagered legally in the United States
 -- Gross profits from sports betting was almost $13.7 billion
 -- Taxes paid to states from sports betting was just over $2.8 billion, a 30% increase from 2023

And the numbers for states was even more telling. The following figures were from New York for 2024, a state that only allows internet sports betting and no other forms of internet gambling:

 -- The handle for sports betting was approximately $22.7 billion,
 -- Gross gaming revenues were just under $2.05 billion
 -- Taxes provided to the state was under $1.05 billion thanks to the 51% tax rate. That itself represents almost 38% of all taxes paid from sports betting across the country and is in addition to annual licensing fees.

These numbers are indeed impressive and far greater than anticipated. But unfortunately, because of the addictive nature of gambling, there has been a significant impact on the wellbeing of some compulsive gamblers. A report released by the National Council on Problem Gambling released at the end of 2023 indicated that almost 2.5 million adults in the U.S. are severely addicted to gambling, and another four to six million people have mild to moderate gambling problems. The Council said the figure grows each year and can mostly be attributed to the proliferation of sports betting across the U.S. It is acknowledged that casino gambling is more addictive than sports betting, but as of today there are still only seven states that allow online casino wagering, so the only logical conclusion is that sports betting is the cause of the increase.

Taxes raised from sports betting are used for different reasons by states, although most are designated for social programs, education, healthcare or infrastructure. Looking at the three states with the highest sports betting revenue, these are how taxes derived from betting are being used:

 -- All sports betting revenue in New York is used to help fund the public school system with $5 million withheld to fund sports programs for poor youth
 -- Sports betting revenue in Pennsylvania is used to for property tax relief, economic development, and to support for the agricultural community
 -- Sports betting revenue in New Jersey is used for various state social programs, infrastructure and education

So, it’s not surprising that states are unwilling to give up those huge tax revenue streams even if it means an increase in problem gambling. This of course is not just a U.S. issue. The UK, Australia and most other countries that have a large gambling economy are trying to balance the benefits of gambling revenue with the social cost to some of the more vulnerable public.

Can Federal legislation attack the problem?

As an attempt to address this, two federal gambling bills have been put on the table that would not stop states from offering gambling but would put in strong measures to cut off ways that attract problem gamblers. The main bill on the table is called the Supporting Affordability and Fairness with Every Bet Act (SAFE Bet Act), and was introduced by New York Congressman Paul Tonko and Connecticut Senator Richard Blumenthal in September 2024, before Donald Trump was elected as President and was re-introduced in March of this year. The SAFE Bet Act provides national standards required before a state or licensee can start offering sports betting but more concerning to operators and some pro gambling state legislators, it has very strict rules to stop problem gambling in its tracks.

Unfortunately, it would also create a huge disincentive and punishment to bettors who do not have a gambling issue. These are the main features of the bill which can be seen here. 

- No sports betting advertising from 8 am to 11 pm local time
- No advertising during live events
- No advertising that instructs people how to wager
- No bonuses to induce gambling including no sweat bonuses, profit boosts, deposit matches etc.
- Disallowing more than 5 deposits in a 24-hour period
- Requiring operators to conduct an affordability check before allowing larger deposits (no amount stated)
- Requiring operators to check the national self-exclusion database before accepting bets
- Requiring AI to be used to monitor betting patterns and spot and stop potential problem gambling
- Disallowing AI to be used to create individualized promotional offers

Another bill called the Gambling addiction Recovery, Investment, and Treatment Act (GRIT) authored by the National Council on Problem Gambling would set aside 50% of the federal sports excise tax to be used for addiction treatment and research. Upon introducing the bill, the Council indicated that the social cost of problem gambling in America is $7 billion and climbing. No doubt states would be reluctant to give up so much of their revenue for this purpose and would suggest that it’s a state decision on where to spend the tax revenue from gambling.

State legislation also underway

While the SAFE Bet Act is receiving a lot of attention, some more recent state legislation is also causing concern. In particular, New York Assemblyman Robert Carroll introduced bill A7962 (not yet titled), that has the following stated purpose: To establish certain limits on sports betting for both mobile and casino sports betting to include advertisements, wager limits, and prohibiting the use of credit cards to make deposits on mobile sports betting.

The bill emulates much of the SAFE Bet Act but goes several steps further.

Like the SAFE Bet Act, it would ban sports advertising from 8 am to 11 pm, disallow ads during live games, disallow more than five deposits in a 24-hour time frame and would prohibit bonus offerings, including what the bill calls "odds boosts, no sweat bets, bonus boosts or any other similar term."

But, unlike the SAFE Bet Act, bill A7962 also disallows any use of credit cards for funding bets and more concerning, restricts deposits to $5,000 in a 24-hour time frame and maximizes bets $5,000 in a 24-hour period.

A similar bill was introduced in Massachusetts earlier in 2024 and really has received no traction. It is also a little less draconian than A7962, as there is no deposit restriction, although the bill would require Massachusetts operators to conduct an affordability check before allowing wagers over $1,000.

A couple of gambling analysts I spoke to believe many states are waiting to see what happens with the SAFE Bet Act before deciding whether to create a bill similar to A7692. It has not gone unnoticed that all these bills were introduced by Democrat legislators and in states that voted Democrat in the 2024 federal election. It’s uncertain why anti-gambling legislation is seen as a Democrat issue, although concern for the welfare of the vulnerable population has always been more of a Democrat concern. It’s also very notable that many of the biggest donors to the Republican party have been involved in the gambling industry, including the Adelsons and Wynns. And Trump himself has stated in the past that he believes in gambling expansion and doesn’t feel the industry should have its hands tied. It was partly due to his efforts that the Republican dominated SCOTUS struck down PASPA in 2017. 

Donald Trump free to weigh-in

In recent months it has been reported that Trump has stated frustration that the United States is lagging behind Canada in terms of online wagering. One analyst who works in Washington said that Trump has told some prominent staffers that that Canadian iGaming is outstripping American iGaming because there is next to no regulation north of the border and far too much regulation in the U.S. And Trump has stated that he wants to even that out.

In his first term Trump did not say much on internet gambling because his biggest donor, Sheldon Adelson, was completely opposed to iGaming, and even introduced the bill RAWA (Restoration of America’s Wire Act), and Trump didn’t want to cross him. In fact, in September 2018 the DOJ tried to reverse a 2011 decision which ruled the Wire Act only applied to sports betting at the request of Adelson. But it failed to gain traction after the New Hampshire state lottery challenged the DOJ in court, and the issue was completely dropped by Attorney General Rod Rosenstein because Trump didn’t want it to be a distraction in the 2020 election. Since that time, however, Adelson passed away in January, 2021 and Steve Wynn (who also supported RAWA) is now out of the gambling picture, so there is no reason for Trump to remain silent on his pro-iGaming stance. From all reports Miriam Adelson and the LVSC board are not nearly as opposed to online gambling as Sheldon Adelson was.

Therefore, the chances of a federal bill such as the SAFE Bet Act passing and being signed into law are slim at best. The state bills are more concerning since the law in the U.S. effectively allows states to introduce their own legislation under the 14th amendment. Consequently, A7962 does have many operators concerned. An executive from one of the licensees in New York who agreed to provide me a quote if he and his company were left off the record said the following:

"We’re hanging on by a thread in New York and are constantly having  internal discussions on the logic of trying to compete with FanDuel and DraftKings who dominate. But we are also forward thinking and know that if the taxes ever came down, we would be banging our heads against a wall for giving up the New York license. Don’t get me wrong, if that idiotic bill ever passed, we would be gone faster than you can say boo. Imagine not being able to take a bet over $5,000 on the Super Bowl, a National Championship or on a day of March Madness. It’s a non-starter. The bans on advertising and promotions are one thing but limiting multi millionaire Wall Street executives from placing a good wager on a game benefits no one. I thought Addabbo was trying to help us become profitable in the state but it seems there are other forces working in a different direction."

That comment brings up a good point. All New York operators, including FanDuel, are still not profitable in New York thanks to the 51% tax. NY Senator Joseph Addabbo Jr. has been working with operators to try and lower the tax but has received pushback from almost all others in the state  government, including Governor Kathy Hochul, who said they aren’t prepared to give up tax revenue which goes to help education. Consequently, Addabbo has resigned himself to the fact that in its current situation there is no chance New York can get to the magic 13 operators that would lower the tax rate from 51% to 36% based on the tax matrix introduced by Andrew Cuomo in 2020. But Addabbo believes the solution would be to legalize internet casino gambling which would bring in new operators, some of whom may consider offering sports betting too.  When asked about the status of iGaming in New York at a recent conference Addabbo stated:

"The numbers from iGaming will eclipse mobile sports betting numbers in New York because the population is that much greater. And if you do it in a very safe, responsible way, it will be one of the safest products in the country."

While no tax rate for online casino gambling has been announced, it is believed the tax on iGaming would be less than 30% and there could be an added incentive that would reduce the tax for any licensee that also offers sports betting. If that were the case, it could indeed finally lower the ridiculous 51% tax charged on sports bets by the state. It is quite notable that Addabbo addressed the almost certain pushback relating to problem gambling associated with iGaming with his statement.

So, Carroll’s bill, A7962 has been sent to the Assembly Committee on Racing and Wagering and if approved will go to the state Senate and House to vote. It has a long way to go before getting to that point and analysts I spoke to give it less than a 10% chance of passing because of the outcry that would come from the operators and Senators like Addabbo. The SAFE Bet Act has even less chance of passing. Nevertheless, the bills do bring up an important message that problem gambling is a real issue and must be considered in any gambling legislation. But like everything in life there are pros and cons to everything and whether the problem gambling groups want to admit it or not, if legal sportsbooks and casinos were not available, there are plenty of illegal operations only too happy to take the action.

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