Sports Betting May Soon Be Legal in Your State, but Never Gamble With IRS
The good news about Monday’s Supreme Court ruling is your annual March Madness bracket pool may no longer be technically illegal. The bad news is that if you win, Uncle Sam will want a cut.
The ruling gives individual states the freedom to legalize sports betting (or not).
Here’s the long and short of it: The Supreme Court overturned a 1992 law called the Professional and Amateur Sports Protection Act (PASPA) that made it illegal to bet on sports, with one or two exceptions. Most notably, Nevada was exempt from the law, which is why you could go to Vegas and bet on the outcome of a single game legally for the last 25 years.
The ruling resulted from a New Jersey challenge to the law that dates back to 2014. One could guess that Atlantic City wants in on some of that Vegas action, right?
What’s the Big Deal About the Supreme Court’s Ruling?
According to ESPN, as many as 32 states are expected to offer some form of sports betting within the next five years.
The argument against sports betting has long been centered on the integrity of the sporting events themselves. If sports betting is commonplace, what’s to keep players, coaches and officials from betting and spinning the results in their own favor? (Shoutout to Pete Rose!)
How each league will address this issue is yet to be seen, but really, sports betting has been around. This new ruling is simply bringing it out into the open.
Wasn’t I Already Betting with FanDuel and DraftKings?
Not really. If you’re having some fun with daily fantasy sports (DFS), you’re still considered to be playing fantasy sports and not gambling. Splitting hairs? Yeah, probably.
Part of the difference comes down to taxes. If you win big in a DFS league, you’d be taxed according to hobby rules. Essentially, if your winnings equal $600 or more when your fees are taken out, you’ll owe taxes.
Sports gambling as a legal entity will be taxed according to gambling laws, which are a bit less forgiving. DraftKings and FanDuel are already preparing to get in on the action.
The new ruling opens the door for a lot more than just daily fantasy sports. You could be able to plop down a big bet on a single game if your state decides to allow it.
Just be ready to give Uncle Sam his cut when you rake it in from that big bet you made on the Browns beating the Patriots. (Hey, it could happen. Maybe. Probably not.)
Even if your state legalizes sports betting, be smart about it. Betting beyond your means is not The Penny Hoarder way.
Tyler Omoth is a senior writer at The Penny Hoarder who loves soaking up the sun and finding creative ways to help others. Catch him on Twitter at @Tyomoth.
