Addiction Markets

  But if you want to outlaw this harmful activity [licensed gambling], you have to find a way to replace 6.4% of Maryland’s budget, which is slightly less than the entire amount the state brings in from corporate taxes.

A fraction of the proceeds of losing bets from a fraction of Maryland's citizens contributes almost the same to state services -- EMS, education, road maintenance, etc -- than the total corporate taxes levied on all businesses.

Do I misunderstand, or is this just actually incredible?

Incredibly damning, yes

Damning which way, though? Are gambling taxes too high, or are corporate taxes too low? And since corporate income is surely higher than gambling income, I’m inclined to think that gambling taxes are too high AND corporate taxes are too low, creating this odd fact.

Edit: and I know it sounds weird to say that gambling taxes are too high, when one could argue that high taxes are meant to disincentivize a thing - but if that thing is highly addictive, and if no other state action is taken to disincentivize that thing, then it’s actually a really sticky income source for the government who now doesn’t want to get rid of their cash cow. Tobacco ads are outlawed, which did more than taxing tobacco. Gambling ads are absurdly common.

There are a lot more people than corporations.

This part seems disingenuous. The article is primarily about sports betting, and the author reports that the amount that a much larger category brings in amounts for 6.4% of Maryland’s budget. Without close reading it leaves the reader with the impression that sports betting is responsible for 6.4% of the budget.

When you lose (most people, most of the time), you don't have to pay tax on winnings because there aren't any. But gambling itself seems like sort of a regressive tax that preys upon those susceptible to gambling.

Edit: at least with state lotteries the state gets most of the money so it is more like a tax; in the case of corporate sports betting the corporation takes the money and then pays a small corporate tax on it.

Federally, That's not even true anymore. In the BBB there was a tax code change that says you can only write off 90% of your losses from sports betting now.

If you win $95 on one bet and lose $100 on another, you owe taxes on $5 of that $95.

Regressive taxes can be counterbalanced by redistributive policies. Sales taxes are regressive too for example and bring much much more revenue. The issue is sales taxes disincentivize consumption whereas gambling taxes disinventivize gambling.

> whereas gambling taxes disinventivize gambling.

Do they, though? The vig is 10%, very transparently shown in the odds, and paid immediately. It proves very little disincentive. The tax is paid annually and only if you win; for most people, it is 0%. Are we really going to argue that the tax is a serious factor in discouraging the behavior?

Taxing something almost always decreases usage. By how much depends on the rate and the elasticity of demand. Gambling demand is probably very inelastic, much like cigarettes and alcohol. (Your argument supports this too) If the rate is low too I can see your point about not having much effect. But it still has an effect. Excessive sin taxes can be the sign of a nanny state, but otherwise I agree with it. All taxes are bad anyways, some are just less worse.

No to both. You probably understand it but it’s not that amazing. States don’t tax corporations much (it’s often fairly easy to move your company to the next state over if taxes are lower) the federal government does. They tax things like sales, homes, gambling and other vices, etc.

> Sales taxes are regressive too for example and bring much much more revenue.

That's because "tax the rich" is actually pretty bad tax policy because the rich really don't make a lot more income than the upper-middle to lower classes.

If you look at countries with robust social safety nets, they don't get there by taxing the rich.

> When you lose (most people, most of the time)

For modern gambling (not including some prediction market setups) its actually all of the people (still allowed to play), most of the time.

Because if you win regularly they limit or outright ban you from playing. If they keep letting you play they have determined algorithmically that you're statistically a loser over time.

So not only is this easy access to online/app-based gambling financially devastating for those predisposed to become addicted to it, its also effectively legally rigged in that the house has no obligation to take bets from people who are actually good at it, and they have all the data they need to detect that very quickly.

We should found the government via heroin and christal meth sales.

> In the BBB there was a tax code change that says you can only write off 90% of your losses from sports betting now.

If I understand correctly that’s no longer the case as “sports betting” prediction markets are now becoming a financial product.

https://www.bloomberg.com/opinion/newsletters/2025-07-10/do-...

Damning in that pretend I told you my household income was supported by Vinny the bank robber who gives me cash and I launder it for him, and that pays for 6% of my household income. If I told you you can't make bank robbery illegal because I need that money, would you take me seriously at all?

They dont get there by making rich untaxed, uncontrolably powerful and above the law either. Taxing the rich is a necessary component, just like the justice system that applies to rich too.

That’s not the only reason. Well to an extent it is, because the rich are much better at optimizing taxes, however you can close the “loopholes” and such, then there are wealth taxes.

The problem is that the rich are ultra mobile, just like their capital, so unless you restrict that they’ll just move somewhere else where taxes are low.

So countries basically end up competing with each other by lowering taxes to attract them while destroying their middle classes..

Same more or less applies to companies

There is a theory that talk of "those susceptibile" to gambling is in fact astroturfing by gambling corporations to make it seem like they're only damaging the weak willed.

And you're not weak willed are you? So nothing to worry about. Bad things only happen to bad people.

When you describe a tax that is "paid annually and only if you win", that's plain generic income tax.

That's not the gambling-activity-specific taxes that Stoller's article discusses - typically applied to gambling businesses' revenues, not bet winners specifically.

A state is funding essential public services not through productive economic activity, but by extracting money from people losing bets

Not losing bets, all bets

They do on the other hand hold a significant portion of the wealth. Unfortunately wealth tax is complicated, both because actually measuring the wealth for tax purposes can be hard, and the rich can (and will) just move away from any sufficiently effecient tax scheme.

So upper middle class ends up paying the bill.

Yes, because if the tax were 100% then people would still bet, they would just move it off platform. Just like every other sin tax in existence.

Do you have proof to back up this claim? I know there are professional people and organizations (companies) that are heavy into prediction and sports betting, they are not getting throttled.

We should ban heroin and crystal meth so nobody does it anymore.

No that would give the CIA an undue monopoly on it. That just screams anti-trust!

Good idea to impose piguouvian taxes, not a good idea to impose sale taxes as that's regressive.

Property tax's a mixed bag since it taxes both land and building when ideally you only want to tax land.

States that impose income taxes are choosing not to imposes taxes elsewhere like land, which is the ideal tax. Income taxes have negative consequences since you're taxing economic activity.

It's easy to tax certain assets, such as land. LVT is actually the ideal tax in many ways, since a LVT is undodgable. Actually it doesn't matter whose name is on the title.

Sufficiently high LVT will deter speculation, leading to collapse in land price and encouraging efficient usage of land and drastically affecting our political landscape.

In one sense, winning bets. If you lose, you lose: your money is gone either way. If you win, the fact that the probabilities sum to about 1.05 means you win less than you would have in a fair game. The state just takes a cut of that extra 0.05.

It's very weird to me how some state entities think cannibalism will cure famine.

Sounds like a win to me, you can leave more for productive activity to grow and attract more, there less incentive for illegal gambling, and no one is forced to do it.

If there’s a massive burden with addicts, you can still impose that the gambling industry pays more to offset.

It's a very common thing, it's called gubbing in the circles I know it from.

There are services called betting exchanges that essentially facilitate peer-to-peer gambling, they make money from commission so they don't care at all about your betting strategy, big players and companies are probably operating on those platforms.

corporate tax makes no sense for states where you can hire a lawyer to change the home of your corp in a day. States impose income taxes which are harder to dodge and do less to disincentivize investment from corporations. What needs to change is federal capital gains tax, thats the main reason business owners pay such low tax percentages.

The goal of the governement is to facilitate conditions where as many people as possible are happy, safe and healthy. The economy of a state is in service of that goal, not the other way around.

Yes but states provide the roads, EMS, schools, etc the commenter was talking about, not the autocratic regime.. and the corporations benefit from those services way more than gamblers do.

I think the author was more trying to say that to ban sports gambling you may need to ban legalized gambling altogether.

> no one is forced to do it

This logic always bugs me because no one truly lives in a vacuum. People are flawed and generally need help from a community. A small community can't really fight back a well endowed company like gambling companies. The whole(stated) reason android is losing unsigned side loading is because grandmas in SEA are sideloading gambling apps.

It's obvious to me that gambling is generally a vulnerability in the human psyche. For many, it short circuits something in their brain and forms genuine addiction.

It's actually insane to me to use this vulnerability as a tax base to fund roads and schools, because regardless of the funds, your incentives will still be perverse and those incentives will dictate that more people need to be losing their money to out-of-state firms because a small portion of it might fund roads and schools.

The incentives basically state: "A percentage of our population must become sick and addicted to risk and reward in order for society to function". Is this not basically the concept of Omelas?

U.S. DOT provides a ton of road funding to the states as well. If memory serves, it’s often over half their budget.

[Edit: fun fact: threatening to withhold this funding is how the U.S. DOT managed to essentially federalize drinking age of 21. (https://en.wikipedia.org/wiki/South_Dakota_v._Dole)]

Sales taxes are levied on the buyer. Gambling taxes are not levied on the player.

Every other sin tax is levied on the consumer, unlike gambling taxes.

That seems wild since exchanging “bet” for “stock trade” results in a very different result…

This might not be the case for crypto market because crypto, but all the centralized sports betting platform do it.

Otherwise they wouldnt be able to give out "free bets money" for marketing purposes all the time as you could just play opposite bets on multiple platforms.

The really bad part is that the middle/upper-middle class is the real cash cow, the top ~75%. These people are incredibly numerous and have good to incredibly good disposable income.

But since they are such a large cohort, you cannot form a policy around increasing the burden on them. And after all, the tech family pulling $450k/yr are still a "working grunts".

So it's all eye's on the top 1%, but a true wealth gap fix would actually come mostly from harvesting the wealth of the top 20-30%.

Taxing productive economic activity is bad

The difference is there's a clear societal benefit to stock market investment, whereas there's a clear societal detriment to sports gambling as it exists today.

The probabilities sum to less than 1, not greater than 1, right?

That's... kinda ridiculous? It sounds like you're just against taxation period. How should a government fund itself?

The incredible part is how that's only a tiny fraction of the profits the owners of that gambling operation are extracting from the citizens of maryland. Gambling addiction is a big in the human firmware, and we shouldn't allow private businesses to benefit from it, to the extent stem bwe can reasonably prevent it. Make the state the only source for gambling, make it low-dopamine, and get all the benefit for the state, with a sizable chunk devoted to treating gambling addiction.

Why shouldn't we tax the buildings? It seems like there's lots of real estate out there with relatively moderate land value but astronomical building value.

Really? Where are those properties?

You can, but it's a tax on real wealth, which incentivizes a reduction in real wealth. More concretely it incentivizes fewer buildings because people want to pay less tax. If you want fewer buildings then fine.

The amount of land is fixed. Taxation on land does not decrease land, but rather incentivizes efficient land use and decreasing land values (which improves efficiency of land use).

I think this is a pretty good approach actually. Give people the freedom to gamble, but discourage it through taxes. It's best to tax things you want to discourage. So it's preferable to tax gambling rather than productive economic activity.

Related concept: https://en.wikipedia.org/wiki/Pigouvian_tax

Zero taxation is just as bad. There's a certain amount of taxation that has to be met, and it's best if it comes from as harmful activity as possible, because whatever gets taxed is discouraged. If there isn't enough harmful activity to meet tax needs, then start taxing normal activity.

> no one is forced to do it

Go tell that to joint bank accounts and family court.

Having a government tax base funded significantly from the exploitation of addictive behavior and siphoning money away from productive consumptive purposes is also bad, but less easy to make a sound bite from.

> The whole(stated) reason android is losing unsigned side loading is because grandmas in SEA are sideloading gambling apps.

Do you have more details on this? I hadn't heard this angle on the story before.

I'm mildly surprised this is a concern Google has to have.

What does this comment mean?

Most of the value of urban land comes from the public infrastructure and economic life around it, not from the promoter's actions which are very common. Besides a tax of land incentivizes usage (so wealth creation), rather than thesaurization.

Gambling is an addiction without physical substance, it is not clear if taxes reduce gambling.

If spouse-a has gambling addiction and spends all of the family money, then spouse-b was effectively forced to gamble.

Taxing the dopamine thing does not discourage the doing of the dopamine thing. Just penalizes the addict and worsens their position.

Huh? Cigarette and alcohol taxes are levied on the vendor in exactly the same way a gambling tax is. Make your own alcohol and drink it yourself, share some with your friends, and you'll never pay an alcohol tax.

> the rich can (and will) just move away from any sufficiently effecient tax scheme

England managed to confiscate the estates of its major lords through the inheritance tax.

The rich can leave, but they can't take their house with them.

I read the Omelas story differently but maybe is the same. It's just a predatory dominance play. Some people get the dopamine hit from dominance, so for them it is a double win- their stuff is funded by others and it is the "weakness" of others (perceived by the dominant) that produces the funding. Having and eating the cake, etc.

Taxing the buildings incentivizes urban sprawl and blight. People with money to park will park it in empty lots, waiting for the land to increase in value instead of paying the extra property tax to develop it themselves.

The result is a downtown with empty lots, abandoned buildings, and short buildings, right next to skyscrapers making much better use of their footprint and surrounding infrastructure

When a pedestrian has to walk one block further because they're walking past an empty building or empty lot that a rich person has dibs on, it produces negative value for the city

We're kind of in the middle of that shift, but yeah, prediction markets are futures contracts and handled differently.

The main sportsbooks you see advertising on TV like Draft Kings, Fan Duel, etc are still the old sports betting model where you're betting against the house. That's still taxed as sports betting. Kalshi, Polymarket, and some smaller sports focused apps like NoVig and Sporttrade are prediction markets that allow sports predictions and those would allow a full write off.

That said, I've heard that most of the major sportsbooks like Draft Kings and Fan Duel are building out their own prediction market platforms, so I think it's only a matter of time until everyone is in that model. Even ignoring the tax implications, it's lower risk and more consistent revenue for the books since they can structure things so they make money on every trade (if they want).

Not being forced to open a joint account either…

In all seriousness, all the pushback against paternalism comes from people who still believe in free will.

I'd have to look for it. At the very least, the pilot program is happening there, and I've read on here it's a big scam to have sideloaded gambling apps take people's life savings.

This meta-analysis apparently found that alcohol taxes were effective for reducing alcohol consumption:

https://pmc.ncbi.nlm.nih.gov/articles/PMC3735171/

Why should gambling be different?

Cigarette and liquor taxes are levied on the purchaser, just like gas taxes. Gambling taxes are taxes on the gambling houses/platforms not excise taxes.

Good point - random or unpredictable rewards are known to be compelling/addictive for rats, and the same trick seems to work on most humans as well.

Though as I understand it much of money in gambling is made from "whales" - players who lose lots of money and keep playing anyway. The same term is used for f2p game players who spend a lot of money on in-app purchases, often tokens for virtual slot machines for desirable in-game items.