March Madness—the time when the best men’s and women’s college basketball teams challenge each other—is a made-for-television spectacle watched by millions. While March Madness has been around for decades, one of the tournament’s biggest changes happened in 2018, when the Supreme Court struck down the ban on sports betting.
March Madness—the time when the best men’s and women’s college basketball teams challenge each other—is a made-for-television spectacle watched by millions. While March Madness has been around for decades, one of the tournament’s biggest changes happened in 2018, when the Supreme Court struck down the ban on sports betting.
Since then, legal sports betting has skyrocketed. Americans made US$120 billion of legal sports bets in 2023, according to the American Gaming Association, which promotes gambling. In 2024, the group predicts Americans will place $2.7 billion of legal bets on March Madness alone.
I am a business school professor fascinated by March Madness and sports betting. Studying sports betting has shown me how valuable it is for states short on cash. Unfortunately, it also has significant drawbacks, especially for gambling addicts and their families.
As of March 2024, 38 states allow some form of sports gambling, and six more are debating the issue. State lawmakers are interested in sports gambling because they have a fiscal problem. State spending over time has increased in both absolute and per-person terms after adjusting for inflation.
While state spending is increasing, state revenue from so-called “sin taxes” has flatlined after adjusting for inflation. People are smoking and drinking less, reducing revenue from cigarette and alcohol taxes. Even lottery revenue has flattened out after growing strongly for decades.
Increased spending combined with a reluctance to raise taxes has led to a push to find new sources of revenue. That makes sports betting an appealing option to politicians.
Billions of dollars are wagered on sports each year.
