Betting isn't something that only happens at racetracks or casinos anymore – websites and apps are helping sports betting become a nationwide pastime. And as it grows in popularity, some state coffers are benefiting to the tune of millions in tax revenue from wagers on professional sports.

“Sports gambling” is defined in federal law as “a lottery, sweepstakes, or other betting, gambling, or wagering scheme based, directly or indirectly (through the use of geographical references or otherwise), on one or more competitive games in which amateur or professional athletes participate, or are intended to participate, or on one or more performances of such athletes in such games.” Basically: placing bets on the outcomes of sporting events or on the performance of particular athletes.

Sports betting can happen in person (such as at a casino or sportsbook/off-track), online at websites like FanDuel, and through smartphone apps.

Sports betting is not federally prohibited in the United States; its legality depends on individual state laws.

State-by-state legality was not always the case: sports betting was effectively banned nationwide in 1992 under the Professional and Amateur Sports Protection Act (PASPA). That law prohibited states from authorizing sports betting, although gambling was allowed to continue in four states that had state-authorized sports betting schemes in place pre-PASPA:

• Nevada, where all sports betting was already legal and regulated.
• Delaware, Oregon, and Montana, which were permitted to continue the limited forms of sports betting they already allowed — primarily state-run sports lotteries or parlay-style betting — but weren’t allowed to expand beyond those formats.

In 2018, the Supreme Court struck down PASPA, ruling that the federal government could not prevent states from deciding their own sports betting laws and giving states gained the authority to legalize, regulate, or prohibit sports betting. Many states have since enacted their own sports betting laws, while others continue to prohibit it.

Sports betting has been legalized in some form by 39 states and in Washington, DC. Rules specifying which sports are allowed, how betting happens (online or in person), and how betting activity is taxed vary by state.

Sports betting has not been formally legalized in 11 states: Alabama, Alaska, California, Georgia, Hawaii, Idaho, Minnesota, Oklahoma, South Carolina, Texas, and Utah.

Based on available 2025 data (January through September), sports betting generated $2.71 billion in state tax revenue. Over the same period in 2024, it brought in $2.15 billion; total 2024 revenue was $2.99 billion. Sports betting tax revenue has increased each year since data collection began in 2021.

Sports betting revenue tends to be seasonal. It’s higher in the fall and winter months, peaking in the first quarter of the year (January through March), when the National Football League’s Super Bowl and the March Madness college basketball tournament happen, along with the end of the National Hockey League and National Basketball Association regular seasons. In the first quarter of 2025, sports betting generated nearly $1 billion in tax revenue nationwide.

When revenue is broken down by calendar year, the fourth quarter (October through December) generates the most tax income. Why? Most of Major League Baseball playoff games and the World Series happen In October and November.

In 2025, Census Bureau data shows that 41 states and Washington, DC, reported state tax revenue associated with sports betting or related wagering.

There’s a slight difference between the number of states that report revenue, and the number of states that have legalized sports betting: that’s because state governments report revenue under Code T18 (Sports Betting Sales Tax), which includes taxes on sports betting and, in some states, horse racing wagers. Code T18 also extends the definition to “the outcomes of non-athletic events, such as reality show contests, entertainment awards shows, and political elections.” Under this classification, taxes are paid on revenue generated from bettors’ wagers, not paid directly by bettors.

So, some states that legally allow sports betting may report little or no revenue in this category if wagering activity was limited, the state doesn’t levy a dedicated sports betting tax, or revenue is reported under a different tax classification.

Under this tax revenue classification, New York generated the most of all states, at $1.2 billion in a year, and South Dakota levied the least: $118,000. New York was the only state to generate over a billion in revenue.

Ten states generated between $100 million and $500 million in revenue: Illinois, Ohio, Pennsylvania, Massachusetts, Maryland, New Jersey, North Carolina, Kentucky, Virginia, and Tennessee.

Seventeen states generated between $10 million and $100 million. Fourteen states generated less than $10 million.

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