Legalized sports betting has generated numerous economic benefits in states like New Jersey and Nevada, such as job creation, increased tax revenue and tourism growth.
But, it is essential to keep in mind that economic gains come at a price, including pathological gambling which may have devastating repercussions for individuals and their families.
Employment Creation
Sports betting’s increased revenues have given an incredible boost to the industry, increasing team profits and fan engagement while mitigating risks such as match-fixing and gambling addiction. But these positive impacts must be balanced against possible match-fixing or addiction risks that come with sports gambling.
Cities hosting major sporting events benefit greatly from an influx of tourists seeking to place bets, driving hotel bookings, restaurant and retail sales as well as contributing to local economies.
Additionally, taxes levied on betting operators and winnings from bets contribute significantly to state budgets, enabling governments to dedicate more funds towards important initiatives like education, infrastructure, healthcare and social welfare programs. Thus, tax revenue from sports betting has had a beneficial effect on the economy at large and increased sponsorship and advertising opportunities have enhanced growth within sports. Addressing issues surrounding gambling addiction is essential in creating a responsible gaming environment; also essential is creating regulations that safeguard integrity and reputation of sport.
Tax Revenue
Since legal sports betting became reality, state governments have seen substantial tax revenue generated by bettors and the industry increase their budgets for social services, infrastructure projects and education; providing improved lives to residents while strengthening economies across states.
Short-term, tax rate cuts could prompt individuals to work more or spend money on leisure activities; however, their effect could be limited if the economy is performing below its potential and people have difficulty finding more employment.
Legislated tax changes that aim to counteract other influences on output or finance increased government spending may be linked to other economic variables that impact output estimates; as a result, their effects are hard to pin down accurately. Examining output following relatively exogenous tax changes provides more reliable estimates.
Tourism
Tourism provides employment and contributes significantly to the economy in many ways, from production and exports, increasing tourist-related businesses, and increased tourist arrivals, all the way through indirect effects such as local households spending money related to tourism (known as “induced effects”).
Tourism provides less developed countries with an important source of foreign currency. Unfortunately, its profits don’t always make their way directly back into communities that need it; oftentimes they leak back home or end up invested by multinational corporations that operate the tourism industry (Krippendorf 1987).
Economics growth in BRICS nations with well-regulated financial systems is directly tied to tourism development. Estimating an error correction model with one period lag can show the correlations among tourism development, financial development and economic growth – in particular short-run deviations from equilibrium paths are quickly compensated by tourism and financial development.
Problem Gambling
Studies examining problem gambling and betting during economic crises have examined their impacts, yet most use cross-sectional designs which make it impossible to ascertain if any changes in gambling behavior were caused by crisis itself or simply inter-individual differences. Therefore, this research proposes employing longitudinal designs which enable researchers to investigate intra-individual changes between two points in time.
Researchers have attempted to estimate the costs associated with gambling. Estimates include lost productivity, bad debts and other forms of financial harm caused by people gambling beyond their means. Unfortunately, however, estimates such as these often rely on uncontrolled assumptions that are hard to test.
Estimations of gambling-related costs often rely on comparisons between gamblers and non-gamblers, which can introduce bias into an analysis. Although such estimates have their limitations, the authors propose additional work be done in identifying and measuring costs associated with gambling.