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Taxes on gambling winnings in sports

Taxes » Income Taxes » Taxes On Gambling Winnings In Sports

Sports betting in Nevada, Delaware, New Jersey
Sports betting in Nevada, Delaware, New Jersey © L.E.MORMILE/Shutterstock.com

While full-scale sports betting is legal only in Nevada, the opportunity is opening up on the East Coast.

The Professional and Amateur Sports Protection Act, or PASPA, enacted in 1992, outlaws sports gambling everywhere except in states that had previously legalized sports wagering. This covers Delaware, Montana, Oregon and Nevada.

Delaware took advantage of its exemption and in 2009 authorized betting only on NFL games using parlay, or combined, betting cards. The limited sports betting has not deterred gamblers. Delaware bettors wagered more than $25 million on the NFL in 2012. For the 2013 professional football season, the state doubled the retail sites where sports lottery tickets could be bought.

Neighboring New Jersey is challenging the federal sports-betting prohibition. Voters there passed a sports-betting referendum in 2011. However, the NFL, NBA, NHL, Major League Baseball and NCAA sued the state, citing PASPA, and arguing that the betting law would harm the integrity of their games.

New Jersey has lost lower court rulings, but state officials have vowed to take the case to the U.S. Supreme Court.

The legal fight has been costly, but analysts say sports betting could raise more than $100 million a year for New Jersey.

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