Ads for sports betting are everywhere on radio and television. Is anyone else also tired of them?
Lately, every time I try to watch a sporting event on TV, or listen on the radio, I am exposed to a sports betting ad. These ads even permeate the live reporting of a game, during which announcers give their opinions on how many runs or points will be scored in the next period for betting purposes.
Radio shows will devote a half-hour time slot to a so-called “betting expert” for their opinion on upcoming games. And retired future Hall of Fame athletes are doing commercials for gambling, highlighting their luxurious lifestyles.
The most historic sports venue still standing, Wrigley Field, will soon open a sports betting center adjacent to the park. The Cubs ownership has stated that it will not own the facility but will derive advertising revenue of $100 million from the yearround facility over a 10-year period. And the Bears’ possible move to Arlington Heights may be influenced by the allure of additional revenue from sports betting in the planned complex.
All these things could eventually affect the integrity of the sport.
State and local governments encourage the expansion to create tax revenue from one of the last available sin taxes. Lawmakers raise tax dollars from people’s weaknesses, vices and addictions. The radio ads for sports betting include a disclaimer at the end of the spot that quickly mentions a number to call if you have a gambling problem (and the audio equivalent of a photographic memory, to remember the number).
How it all works
It is difficult politically for lawmakers to agree on logical fiscal budget solutions, such as cutting spending and raising income taxes on everyone proportionately. Instead, they tax cigarettes, liquor, legalized marijuana and now, gambling. The key to politically selling a tax increase is to give the illusion of taxing the other guy — so tax someone who has a higher income than me, a larger estate, drinks more and is a chain smoker.
The excise tax on some of these goods is in addition to the normal sales tax a retail customer pays. Some of the ingredients also carry a tax imposed on the manufacturer. The end user may be paying more than an additional 40% on the cost of his or her favorite vice. Maybe that is where the term “pick your poison” comes from.
For example, the average price of a pack of cigarettes in Chicago is $16. Of that total, excise taxes amount to $7.16 per pack, 45% of the total cost. Of course, part of the reason for the high taxes is to discourage smoking, but it still creates a large tax revenue source. It remains to be seen if it reduces consumption by longtime smokers. Maybe it will prevent more young people from starting.
Individual sports betting winnings are taxed to the winners at their normal federal and state income tax rates. Their losses may offset their winnings in some cases. Betting operators are taxed in Illinois at 15% of gambling revenue with additional rates assessed in Cook County and Chicago. The state also collects a $10 million initial licensing application fee for sports arenas and a $20 million charge for online sports wagering operators plus additional renewal fees.
Obviously, the more betting volume, the more revenue for the operators, and the faster they recoup their investment, and more taxes in the government till.
I’m sure we will see more sports betting ads now that March Madness is upon us. How many vices are left to tax? What’s next, coffee and doughnuts? In a variation on Gandhi, a measure of a great society is how we treat its most vulnerable members. For now, our grade is going in the wrong direction.