How Massachusetts Sports Betting Tax Revenue Will Be Spent
When sports betting in Massachusetts launches, sportsbooks will pay a 20% tax on revenue from online sports betting and 15% on in-person winnings. Massachusetts sports betting tax revenue will be allocated across the following funds:
- 45% to the General Fund
- 27.5% to the Gaming Local Aid Fund
- 17.5% to the Workforce Investment Trust Fund
- 9% to the Public Health Trust Fund
- 1% to the Youth Development and Achievement Fund
Estimated tax revenue is advertised as a full $60 million per year. That revenue will go to five different funds. While these funds offer important services, sports betting isn’t crucial to sustaining all of them. Sports betting will make the biggest difference in the Workforce Investment Trust Fund and the Public Health Trust Fund.
Sports Betting Revenue Fund Breakdowns
If Massachusetts sports betting raises $60 million in annual tax revenue, each of the three existing funds would get the following amounts:
| 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 |
The state’s General Fund is the pool of money that Massachusetts uses to pay for government services. It’s estimated to be about $35.3 billion in 2023. So, sports betting isn’t going to contribute much to the General Fund compared to income and sales taxes.
In 2022, Massachusetts’ Gaming Local Aid Fund was just under $106 million. Sports betting’s $16.5 million would make a noticeable addition to that fund. While it’s not a majority of the fund, it’s about a 16% increase in the amount of money the state can send to city and town budgets. It’s extra money for schools, parks, police and fire protection, and other services.
The estimated $5.4 million in the Public Health Trust Fund’s $17.2 million budget will make a large difference. The Public Health Trust Fund funds problem gambling research, treatment, and prevention. Adding $5.4 million to a $17 million fund shows Massachusetts’ continued commitment to mitigating problem gambling.
New Funds
Massachusetts’ sports betting bill created two new funds: the Workforce Investment Trust Fund and the Youth Development and Achievement Fund.
The Workforce Investment Trust Fund will offer grants to programs and organizations that provide job training, adult literacy programs, and opportunities that the Secretary of Housing and Economic Development believes will make the state’s workforce more competitive.
The Youth Development and Achievement Fund will fund tuition for higher education, after-school and extracurricular activities, and other academic programs.
With $60 million in sports betting taxes, these two funds would have these amounts:
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| How Much Out of $60 Million? | |
|---|---|
| Workforce Investment Trust Fund | $10.5 Million |
| Youth Development and Achievement Fund | $600,000 |
Both funds have similar counterparts that are currently active. There’s a Workforce Training Trust Fund that spent $21.4 million in 2022. This fund offers money to businesses to train and develop employees. The new fund will target development for workers before they enter the workforce, complementing existing programs.
Massachusetts also has youth programs largely funded by federal grants. Federal grants funded $12.4 million in youth programs in Massachusetts in 2022. The $600,000 of new state revenue is less significant in the full financial picture.
Tax Funding from Massachusetts Sportsbooks
Sports betting will make the biggest difference in the Gaming Local Aid Fund and the Public Health Trust Fund. Sports betting taxes will contribute relatively little to the General Fund.
As for the two new funds, the Workforce Investment Trust Fund adds a significant amount of money to workforce development. The Youth Development and Achievement Fund only adds a small amount of grant money to youth programs.
These are only estimations. But they show that sports betting revenue projections should be examined in the full context of the services they plan to fund.
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