How Massachusetts Sports Betting Tax Revenue Will Be Spent

Once sports betting becomes operational in Massachusetts, sportsbooks will be subject to a 20% tax on online sports betting revenue and a 15% tax on in-person winnings. The tax revenue generated from Massachusetts sports betting will be distributed among the following funds:

• The General Fund receives 45% of the total amount.
• 27.5% will be allocated to the Gaming Local Aid Fund.
• The Workforce Investment Trust Fund receives 17.5% of the total amount.
• The Public Health Trust Fund receives a 9% allocation.
• The Youth Development and Achievement Fund receives a contribution of 1%.

The advertised estimated annual tax revenue amounts to a significant $60 million. This revenue will be allocated to five distinct funds, each serving important purposes. However, it is worth noting that sports betting is not vital to the sustainability of all these funds. Instead, the Workforce Investment Trust Fund and the Public Health Trust Fund will experience the most substantial impact from sports betting.

Sports Betting Revenue Fund Breakdowns 

If Massachusetts sports betting generates $60 million in annual tax revenue, the three existing funds would receive the following allocations:

	How Much Out of $60 Million?	Fiscal Year 2022 Funding
General Fund	$27 Million	$59.5 Billion
Gaming Local Aid Fund	$16.5 Million	$106 Million
Public Health Trust Fund	$5.4 Million	$17.2 Million

Compared to income and sales taxes, sports betting is projected to make a relatively small contribution to Massachusetts’ General Fund, which is the designated pool of money used to finance government services. In 2023, the General Fund is estimated to be approximately $35.3 billion.

The Gaming Local Aid Fund of Massachusetts had a total of nearly $106 million in 2022. With the addition of $16.5 million from sports betting, it would significantly contribute to the fund. Although it does not constitute the majority, this amount represents approximately a 16% increase in the funds available for city and town budgets. This additional money can be allocated towards various essential services such as schools, parks, police and fire protection, among others.

Adding $5.4 million to the Public Health Trust Fund’s $17.2 million budget will have a significant impact. This fund supports problem gambling research, treatment, and prevention efforts. By allocating this amount, Massachusetts demonstrates its ongoing dedication to addressing problem gambling.

New Funds

The Workforce Investment Trust Fund and the Youth Development and Achievement Fund were established through Massachusetts’ sports betting bill.

Grants will be provided by the Workforce Investment Trust Fund to programs and organizations which offer job training, adult literacy programs, and opportunities that the Secretary of Housing and Economic Development deems beneficial for enhancing the competitiveness of the state’s workforce.

Funding from the Youth Development and Achievement Fund will be allocated towards covering higher education tuition fees, supporting after-school and extracurricular activities, as well as funding various academic programs.

These two funds would have the following amounts with $60 million in sports betting taxes.

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	How Much Out of $60 Million?
Workforce Investment Trust Fund	$10.5 Million
Youth Development and Achievement Fund	$600,000

There are currently two funds with comparable counterparts. One of them is the Workforce Training Trust Fund, which allocated a total of $21.4 million in 2022. This fund provides financial support to businesses aiming to train and enhance their employees’ skills. In addition to the existing programs, the newly introduced fund will focus on the development of individuals prior to their entry into the workforce.

In addition, Massachusetts benefits from federally-funded youth programs, receiving a substantial amount of $12.4 million in grants for such initiatives in 2022. Hence, the $600,000 in new state revenue holds less significance when considering the overall financial landscape.

Tax Funding from Massachusetts Sportsbooks

The Gaming Local Aid Fund and the Public Health Trust Fund will experience the most significant impact from sports betting, while the General Fund will receive only a small portion of taxes generated by sports betting.

Regarding the two newly introduced funds, the Workforce Investment Trust Fund contributes a substantial sum of money towards workforce development. On the other hand, the Youth Development and Achievement Fund provides only a limited amount of grant money for youth programs.

These estimations should be viewed in their entirety to fully understand the implications of sports betting revenue projections on the services they aim to support.

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