US Taxation of Gambling Winnings and Incentives to Bet

Sports betting is growing rapidly in the US after its legalization by the Supreme Court in 2018. This paper describes the treatment of gambling winnings and losses in the federal tax code and shows how the system may incentivize some gamblers to substantially increase the scale of their betting in o...

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Bibliographic Details
Published in:	Journal of gambling studies Vol. 39; no. 3; pp. 1253 - 1271
Main Author:	Whelan, Karl
Format:	Journal Article
Language:	English
Published:	New York Springer US 01-09-2023 Springer Nature B.V
Subjects:	Community and Environmental Psychology Deduction Economics Gamblers Gambling Gambling - psychology Households Humans Legalization Medicine Medicine & Public Health Motivation Original Paper Psychiatry Sociology Sports Supreme courts Taxation Taxes Income tax Gambling Sports betting
Online Access:	Get full text
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Summary:	Sports betting is growing rapidly in the US after its legalization by the Supreme Court in 2018. This paper describes the treatment of gambling winnings and losses in the federal tax code and shows how the system may incentivize some gamblers to substantially increase the scale of their betting in order to have a chance to win. This incentive stems from the fact that gambling losses can only be deducted if taxpayers are filing for itemized deductions, meaning the scale of gambling losses has to be large enough to push a taxpayer’s eligible deductions over the standard deduction. This incentive to engage in large-scale betting applies mostly to lower and middle-income households.
Bibliography:	ObjectType-Article-1 SourceType-Scholarly Journals-1 ObjectType-Feature-2 content type line 23
ISSN:	1573-3602 1050-5350 1573-3602
DOI:	10.1007/s10899-023-10189-z