State Taxation of Sports Betting Revenue Should Support Sports Programs for Underserved Youth

With the Supreme Court making U.S. sports betting legal in 2018, every state can now offer sports betting as Nevada has for years.  In January 2019, seven states (Nevada, New Jersey, Mississippi, Pennsylvania, Rhode Island, West Virginia, and Delaware) had legal sports betting operations and had a total of $998.8 million in wagers for January alone. Current state tax rates range from 6.75% to 34%. It is estimated that betting could generate $8.4 billion in potential annual state and federal taxes. 

Read Below or Download PDF with table on percentage of kids ages 6 to 12 by household income who engaged in no annual sport activity from 2011 - 2016.

Other countries around the world have had legal sports betting for years. Some like Norway apply the tax revenues from sports betting to support youth sports for all. As a result, Norway has one of the healthiest populations in the world, while the U.S. does not. Participation in youth sports, particularly for low income children, is woefully inadequate and more funding is essential. Here’s why.

The U.S. Has an Obesity Problem – In December 2018, the U.S. National Center for Health Statistic released a report on national weight gain. It concluded that for the period 2000 – 2016 body weight increased 8 pounds among all men and nearly 7 pounds among all women without increases in height. Current data on children is equally discouraging. A 2018 study by the American Academy of Pediatrics showed overweight and obesity rates increased among children ages 2 to 19 between 1999 and 2016 – with 41.5% of teens being obese by 16 to 19 years old. This study further reports that African American children, Hispanic children, and children of other races have a higher rate of obesity than White and Asian American children.

America’s Youth Get Insufficient Exercise – In a 3-year study of self-reported physical activity among youth only 5.2 percent of children reported meeting the daily goal of 60 minutes for physical activity. In addition, 49.6 percent were insufficiently active, and 5 percent reported no physical activity.

This study’s results are born out in research conducted by Sports & Fitness Industry Association on youth sports participation. While the percentage of children that played one day of a team sport in a year had increased for the period 2011 - 2018 from 55.5% to 56.5%, regular participation (several times a year) in team sports declined from 41.5% to 37%.

Further, with youth sports often requiring fees for children to pay, children from low income families participate even less. Not surprisingly research from the Centers for Disease Control and Prevention shows that youth obesity is higher for low income children than those of high income.

Health Benefits of Youth Sports – People with obesity have an increased risk for high blood pressure, high cholesterol, cardiovascular disease, heart disease, type 2 diabetes and cancer. A computer model from Global Obesity Prevention Center (GOPC) at Johns Hopkins University determined in a study published in Health Affairs that if all current 8 to 11-year-olds in the U.S. did 25 minutes of exercise just 3 times a week, it would result in 1.2 million fewer youth who are overweight or have obesity, which in turn would save $62.3 billion in medical costs and lost wages during their lifetimes.

Solutions for Underserved Youth – Over the past two decades, there has been a steady growth of 501c3 nonprofit organizations throughout the U.S. combating this lack of sports and fitness programs for low income children. There are hundreds of sports-based youth development (SBYD) organizations providing low income children a wide variety of sports and fitness programs including baseball/softball, basketball, hiking, ice skating, flag and touch football, lacrosse, skiing, yoga and Zumba, to name a few.

These programs often include additional support services with school work, employment training, civic engagement, health and nutrition, and trauma therapy. Often these programs are offered after school at local schools for easy accessibility by children. These SBYD nonprofits vary in size – with some offering one program to a dozen children in one location, while others offer their program in several U.S. locations to hundreds, and even thousands, of children.  All financially support themselves through a range of fundraising sources including foundation and government grants, events, and individual donations.

Insufficient Funding - A 2018 national survey by the Laureus USA Foundation of SBYD nonprofits found that 53% of the surveyed organizations said it was difficult to raise the necessary revenues needed to operate. Another national survey of SBYD nonprofits in 2017 by the Youth Sports Collaborative Network (YSCN) found that the top three challenge these organizations faced were all fundraising related, with obtaining new sources of funding (55%), number one.

Accordingly, fund raising is an important part of these nonprofit’s operations, with 51% of YSCN survey respondents stating that they relied on no fewer than 6 to as many as 9 different fundraising sources. Further verifying the nonprofits’ fundraising challenges is the Laureus finding that 56% of the funding commitments for SBYD nonprofits were only for one year.

Allocating State Sports Betting Revenue for Youth Sports -- Sports and fitness programs are essential for all children, not just for those who can afford it. Sports betting is a “once in a generation opportunity” to provide sports access to all children, explains Tom Farrey, executive director of Aspen Institute’s Sports and Society Program.

There are a variety of nonprofit sports-based youth development programs in all states in the U.S. that require additional multi-year funding support in order to provide their programs to more low-income children. Given the societal need and benefits, it is fitting that revenue from state taxation of sport betting should be allocated to help fund these nonprofit sports programs for low income children within the state in which the betting occurs.