Massachusetts Gambling Revenue Allocation Benefits Community

Written By Rashid Mohamed on August 8, 2022 - Last Updated on August 23, 2022
Massachusetts Casino and Lottery Tax

Lotteries and casinos have been a major source of revenue for Massachusetts ever since their introduction to the state in 1971 and 2011, respectively. In turn, the state has collected billions of dollars in tax revenue during that time frame.

Here’s how Massachusetts puts its casino and lottery revenue to use.

Massachusetts gambling history

Massachusetts gambling has traditionally been limited to the lottery, casinos and horse racing. A new addition will soon be coming to the table now that a Massachusetts sports betting bill has advanced to the governor for final approval.

Massachusetts State Lottery

The Massachusetts State Lottery has generated more than $143 billion in revenue during its 51-year lifespan, returning more than $31 billion to the state in the process.

These net profits are then annually distributed to all 351 cities and towns within the Commonwealth.

Each jurisdiction then has the freedom to use their funds however they see fit. Some of the programs funded by lottery dollars include:

  • Public safety staffing and equipment
  • Snow removal
  • Local road improvements
  • School services
  • Programs for seniors
  • Parks and recreation projects

For every dollar spent on the lottery in Massachusetts:

  • 73 cents goes to prizes for players. The MA Lottery paid out over $4.28 billion in prizes in 2021 alone. This averages out to more than $11.7 million in prizes every day — a prize payout percentage that ranks among the highest in the US.
  • 19 cents goes to cities and towns. In 2021, $1.112 billion went to unrestricted local aid.
  • 6 cents goes to retailers that sell lottery tickets. The MA Lottery sells its products through a list of convenience stores, gas stations, supermarkets, restaurants, bars and social clubs statewide. Last year, lottery retailers collected $333.3 million in commissions and bonuses.
  • 2 cents goes to operating costs.

As the only completely self-operated lottery in the nation, the Massachusetts Lottery boasts one of the industry’s lowest administrative costs. In 2021, costs totaled $99.5 million — less than 2% of overall revenue.

Massachusetts casino revenue

Casinos have also contributed a sizeable amount to state coffers in their short 11-year lifespan. In May alone, The Bay State collected more than $26.2 million in tax revenue. In total, Massachusetts has collected over $1.27 billion in taxes and assessments since casinos were legalized.

Unlike lottery dollars, Massachusetts casino tax revenues go to several specific state funds determined by the gaming statute.

Encore Boston Harbor and MGM Springfield each pay a 25% tax on gross gaming revenue. And of that tax:

  • 20% goes toward local aid
  • 15% goes to the Transportation Infrastructure Fund
  • 14% goes into an education fund
  • 10% goes toward a debt and long-term liability reduction trust fund
  • 41% goes to various state funds and operating costs

Plainridge Park pays a 49% tax on its gross gaming revenue. Local aid receives 82% of that and the remaining 18% goes to the state’s Race Horse Development Fund.

Tax revenue beneficiaries

The primary programs that receive funds from casino taxes include:

  • Local aid
  • The Transportation Infrastructure Fund
  • Community Mitigation Initiatives
  • Debt
  • The Education Fund
  • The Public Health Trust Fund
  • The Local Capital Improvement Funds
  • The Massachusetts Cultural Council
  • The Race Horse Development Fund
  • The Massachusetts Tourism Fund

The Massachusetts Department of Revenue distributes unrestricted local aid according to a formula established by the Legislature.

Massachusetts Gaming Commission Chairwoman Cathy Judd-Stein continues to tout the positive impact of the state’s gaming landscape:

“This revenue has and continues to benefit the Massachusetts economy by bolstering local aid, funding transportation and infrastructure projects, ensuring essential community mitigation initiatives are backed, and that the health and safety of the industry and those who engage with it are a top priority. This is a marker of the success of the law and the commitment of our licensees, my fellow commissioners past and present, the MGC staff, and residents of the Commonwealth to a safe and vibrant gaming industry in Massachusetts.”

Judging by the state’s past efforts, Massachusetts sports bettors can soon begin contributing to safe and vibrant gaming environment of their own.

Photo by Shutterstock
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Rashid Mohamed

Rashid Mohamed is an international journalist with a special interest in sports writing. He is a Poli-Sci graduate of Ohio University and holds an A.A.S in Journalism. He has worked in a number of countries and has extensive experience in the United Nations as well as other regional, national, and international organizations. Rashid lives and writes out of Denver, Colorado.

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