The National Association of State Budget Officers estimates that South Dakota collected less revenue than any state last year. That is why the state’s $212 million collected from “sin” is the fifth biggest percentage of government income in the country. The state collects the 19th most in gaming taxes in the U.S., although this is primarily because 29 states do not collect taxes on their casinos at all. The state’s biggest source of sin-based income is the South Dakota Lottery, which generated roughly $117 million in revenue last year. The state’s cigarette tax is $1.53 per pack, roughly triple that of North Dakota. The state’s alcohol taxes are also higher than most, at 27 cents per gallon of beer. According to the South Dakota newspaper The Capitol Journal, the state’s revenues from video lotteries actually dropped as much as 15% last year, possibly because of a smoking ban in casinos and bars which was enacted in November.
Despite having the 15th largest population, Indiana only has the 23rd largest state revenue. The state has the tenth largest revenue from sin taxes, however, and the fourth largest percentage of total revenue deriving from sin. This is largely due to gambling, from which the state made the second largest amount among all the states in 2010. Indiana’s 13 casinos all have a graduated tax rate of 15% to 40% – meaning that the more you make the more you’re taxed – as well as a $3 per patron admission tax, according to the American Gaming Association. Together, this brought in $875 million in 2010 – more than Nevada but less than Pennsylvania. Gambling is not the only major “sin” related revenue for the state, however. About 23.1% of residents in Indiana smoke cigarettes, the fifth highest rate in the country. In 2008, the state made $520 million from tobacco taxes, the ninth greatest amount in the country, despite having the 21st lowest tobacco tax rate.
If you were to take the revenue Delaware collects in a single year from gaming, the lottery, tobacco, and alcohol, and were to divide it among the state’s 897,000 residents, each person would receive $733. This amount is more than double nearly every other state in the country. The state also has the sixth highest percentage of binge drinkers in the U.S. as well. Taxes for both of these substances are either average or below average, including a mere 16 cents per gallon of beer, but the state makes up for this in sheer volume of use. While alcohol and tobacco are significant sources of income, most of Delaware’s profits from sin come from its lottery, with which it earned $275 million last year, and casino taxes, which the state ranks 12th in the country for annual revenue. On May 11, according to the News Journal, the state Senate approved a measure to legalize medical marijuana, which will perhaps soon become another major source of sin revenue for Delaware and other states like it. The bill is awaiting an expected signature by Governor Jack Markell.
Despite being one of the smallest states, with one of the smallest revenues, Rhode Island makes the seventeenth greatest amount among all states through its lottery. Just under half of all the money the state makes through the taxes considered for this list, which constitute 8.66% of the state’s total revenue, comes from the lottery. The state also made $114 million from tobacco taxes in 2008, which is a relatively large amount considering the size of the state’s population. Rhode Island charges a tax of $3.46 for a pack of 20 cigarettes — the second highest amount in the country, behind New York. Each year, the average Rhode Islander pays $671 in sin tax. The only state in which residents pay a larger share is Delaware.
Nevada’s revenue from sin is 12.83% of its total budget, which is nearly 4% higher than Rhode Island’s and greater than the percentages of New Jersey, New Hampshire, and Illinois combined. Not surprisingly, most of Nevada’s income comes from gambling – the state collected more than $835 million, the third-most in the country. In terms of other sin taxes, the state ranks average both in alcohol and tobacco taxes. Interestingly, the Nevada is one of only seven to not have a state lottery. According to the Las Vegas Journal-Business Review, state lawmakers proposed a bill to create one, but it failed last month in the legislature.
-Ashley C. Allen, Charles B. Stockdale, Michael B. Sauter