If and when sports betting becomes legal in Florida, the Sunshine State will be flooded with millions of dollars of tax revenue. How would Florida allocate revenue from sports betting?
Sports betting is paused right now in Florida after a brief launch last year. Whether it will be worked out in the courts or through a ballot initiative is anyone’s guess. But the consensus is that sports betting will return at some point.
Understanding how the state handles its betting revenue now could give a glimpse of how it will handle gambling tax revenue in the future. The key issues of any sports betting regulation are what the tax rate will be and how the state uses the tax revenue.
Parimutuel taxes and Seminole revenue sharing
Today, the state collects taxes from two main gambling sources: pari-mutuel betting and revenue-sharing payments from the Seminole Tribe of Florida.
Pari-mutuel taxes
The state taxes its pari-mutuel facilities. Horse tracks, card rooms and jai-alai frontons fall under the pari-mutuel category. The tax rate is based on the type of betting.
- Quarterhorse racing: 1% of handle (the total money wagered by bettors)
- Jai-alai: 7.1% of handle
- Intertrack bets: 0.5% to 7.1%
- Slot machines: 35%
In addition, facilities pay a variety of license fees.
The state distributes the tax money in a few specific ways. First, some of the money pays for the Division of Pari-mutuel Wagering’s operational expenses.
Second, all slot machine tax revenue goes to the Educational Enhancement Trust Fund (EETF). This fund pumps money into the state’s education system.
Third, all of the other tax revenue, generally speaking, goes into Florida’s General Revenue Fund. That’s basically the state’s checking account used to fund its operations and services.
Here’s how the state spends its general fund, in order of most dollars spent:
- K-12 education
- Public welfare
- Health and hospitals
- Highways and roads
- Higher education
- Police
- Corrections
Seminole revenue sharing
Each year, the state requires the Seminole Tribe of Florida to pay at least $500 million annually from its revenue-sharing agreement. Most of that money goes to the state’s general fund. Three percent of it goes to the local government where a casino is located.
The state also requires the tribe to make a $250,000 per-casino yearly donation to the Florida Council on Compulsive Gaming or a similar provider. The amount is smaller if a casino isn’t open 365 days a year.
The Seminole also pays up to $600,000 a year for an annual oversight assessment.
How would Florida allocate revenue from sports betting?
For all the hype around what Florida’s sports betting industry would look like, talk about tax revenue seems insignificant. However, revenue use can play an important role in how the public views the benefits of sports betting.
For example, Florida Education Champions’ 2021 sports betting initiative required any tax revenue to go directly to the EETF. It allowed proponents of the measure to market it as a win for Florida schools.
While education funding is a great selling point, there is a simple counter-argument.
The state’s current setup sends most gaming revenue to the general fund. It, in turn, sends its biggest chunk of money to education. So, a bill that would appropriate tax revenue to the general fund is still funding the state’s education system.
Furthermore, one could argue that the general fund’s substantial payments to law enforcement agencies (the sixth biggest general-fund expenditure) would play well with Florida’s significant number of conservative residents.
