{"id":36906,"date":"2024-03-24T00:01:00","date_gmt":"2024-03-24T00:01:00","guid":{"rendered":"https:\/\/www.lifeandnews.com\/articles\/?p=36906"},"modified":"2024-03-26T04:42:57","modified_gmt":"2024-03-26T04:42:57","slug":"why-march-madness-is-a-special-time-of-year-for-state-budgets","status":"publish","type":"post","link":"https:\/\/www.lifeandnews.com\/articles\/why-march-madness-is-a-special-time-of-year-for-state-budgets\/","title":{"rendered":"Why March Madness is a special time of year for state\u00a0budgets"},"content":{"rendered":"\n

Jay L. Zagorsky<\/a>, Boston University<\/a><\/em><\/p>\n\n\n\n

March Madness \u2013 the time when the best men\u2019s<\/a> and women\u2019s college<\/a> basketball teams challenge each other \u2013 is a made-for-television spectacle watched by millions<\/a>. While March Madness has been around for decades<\/a>, one of the tournament\u2019s biggest changes happened in 2018, when the Supreme Court struck down the ban on sports betting<\/a>.<\/p>\n\n\n\n

Since then, legal sports betting has skyrocketed. Americans made US$120 billion of legal sports bets<\/a> in 2023, according to the American Gaming Association, which promotes gambling. In 2024, the group predicts<\/a> Americans will place $2.7 billion of legal bets<\/a> on March Madness alone.<\/p>\n\n\n\n

I am<\/a> a business school<\/a> professor fascinated by March Madness<\/a> and sports betting<\/a>. Studying sports betting has shown me how valuable it is<\/a> for states short on cash. Unfortunately, it also has significant drawbacks, especially for gambling addicts<\/a> and their families.<\/p>\n\n\n\n

Why lawmakers love sports betting<\/h2>\n\n\n\n

As of March 2024, 38 states allow<\/a> some form of sports gambling, and six more are debating the issue. State lawmakers are interested in sports gambling because they have a fiscal problem. State spending over time has increased in both absolute<\/a> and per-person terms<\/a> after adjusting for inflation<\/a>.<\/p>\n\n\n\n

While state spending is increasing, state revenue from so-called \u201csin taxes\u201d has flatlined after adjusting for inflation. People are smoking<\/a> and drinking less<\/a>, reducing revenue from cigarette<\/a> and alcohol taxes<\/a>. Even lottery revenue has flattened out<\/a> after growing strongly for decades.<\/p>\n\n\n\n

Increased spending combined with a reluctance to raise taxes has led to a push to find new sources of revenue. That makes sports betting an appealing<\/a> option to politicians.<\/p>\n\n\n\n

The statehouse always wins<\/h2>\n\n\n\n

Billions of dollars are wagered<\/a> on sports each year. More than 90% of the money bet goes to paying out winning gamblers. Gambling operators keep the rest, which they share with the states. The percentage kept, called the hold rate, has been steadily climbing over time<\/a>, with 2023\u2019s national average at 9.1%<\/a> of the money bet.<\/p>\n\n\n\n

State governments now collect about half a billion dollars each quarter<\/a>, or about $2 billion a year, from sports gambling. That\u2019s roughly one-fifth of that 9.1%.<\/p>\n\n\n\n

If gamblers bet around $3 billion on March Madness, then states will pocket over $50 million dollars in extra revenue just from a three-week basketball tournament.<\/p>\n\n\n\n

The ugly side of sports betting<\/h2>\n\n\n\n

Gambling is wonderful for state revenues and gaming-company profits<\/a>. However, it has a dark side<\/a>: While many people enjoy gambling, millions of Americans have a gambling problem<\/a>.<\/p>\n\n\n\n

Studies suggest between 1% and 2%<\/a> of adults fall into this category. In Massachusetts, where I teach, a 2018 survey found that about 2% of adults were already problem gamblers, and a further 8% were at risk<\/a>.<\/p>\n\n\n\n

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