Online sports gambling has become one of the fastest-growing industries in America, but with that growth has come an irresistible temptation for lawmakers to keep raising taxes on it.

Over $13 billion flowed through legal sportsbooks in 2024. Yet what looks like free money for the government is really paid for by consumers. If adults are free to gamble, then they should be free to do so without punitive tax schemes that drive up costs and push bettors back toward the black market.

The legalization of online sports betting brings much of this gambling out of the shadows, where state governments can impose taxes specially created for sports betting. But some states have handled this more responsibly than others. There are productive and counterproductive ways to tax gambling.

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