Taxing Horse Race Gambling: the Revenue Potential

Abstract

The revenuo potential of horse race gambling taxation is analyzed by compar-Abstract ing and reconciling the results of recent studies by Gruen and Suits. The different results are reconciled by analyzing the horse racing industry with the traditional theory of a monopoly. The optimum tax rate is calculated for the two sets of data and is only slightly above the actual rate. The state is currently realizing most of the revenue potential from this type of taxation.