Every year about 43 million Americans move to new states, towns, and communities. For years, if you wanted to regularly gamble on sports, you would have had to move to Nevada. Living in Las Vegas, even for the avid sports better, isn’t for everyone. Now, thanks to the U.S. Supreme Court striking down a 1992 federal law that banned commercial sports better at the national level, Americans will soon be able to place all kinds of bets on all kinds of sports — what an exciting time.
According to The New York Time, the legislation the decision overturned — the Professional and Amateur Sports Protection Act — prohibited state governments from authorizing various forms of sports gambling. The Supreme Court, however, stated that the law was unconstitutional.
“It is as if federal officers were installed in state legislative chambers and were armed with the authority to stop legislators from voting on any offending proposals,” said Justice Samuel A. Alito Jr. “A more direct affront to state sovereignty is not easy to imagine.”
Though states still have to pass their own individual laws on the matter, this ruling won’t just impact fantasy football players and those who have waited to gamble on sports for years, it will impact everything.
“This is a dry constitutional issue about states’ rights, but it will likely change how we have viewed sports for the past 100 years,” added Gabriel Feldman, director of the sports law program at Tulane Law School. “It’s called the gamblization of sports. Fans will become much more focused on gambling than following a team. It will make every second of every game of every week interesting to fans as it will give everyone something to root for.”
Sports fans need to be careful, however, while placing bets on everything from their favorite teams winning a random game and over/unders to first plays of a quarter and pregame coin flips; as sportsbooks and casinos across the country will still withhold a large percentage for taxes.
Income taxes account for about half of all federal revenue — $1.68 trillion. While about one-third of federal revenue comes from payroll taxes — $1.23 trillion. The Internal Revenue System (IRS) will certainly want a piece of all winnings as a result of sports gambling.
According to CNBC, Americans spend about $150 billion on illegal sports wagers annually. As soon as people are able to seamlessly place bets on both professional and collegiate sports, the IRS will withhold winnings on more than $5,000 and even less in certain situations, such as if the amount won is drastically more than the original bet (i.e., an $800 win on a $4 bet).
“The amount of gambling winnings, less any losses, gets tacked onto all other income you have,” said Bill Smith, managing director at CBIZ MHM’s National Tax Office in Washington. “And is taxed as ordinary income.”
The new tax law that went into effect this year will enable winners to deduct their gambling losses up to the amount of gambling income, provided they itemize their deductions rather than taking the standard deduction. The information will then get reported on your Form 1040 as “other income.” For winnings above $5,000, casinos will withhold 24%.