Buffett Warns Sports Betting Lets Governments Cash In on the Naïve

In his first major television interview since stepping down as CEO of Berkshire Hathaway, the 95-year-old offered his most pointed verdict yet. Sports betting, he told CNBC's Becky Quick in March, is a "tax on stupidity" that quietly subsidizes the wealthy, including himself.

Buffett said that when states raise money from people for whom each dollar really matters, it effectively reduces the tax burden on him and other wealthy individuals. He added that while the effect isn’t direct, that is the overall outcome. He also said he dislikes systems that take advantage of people, especially when they are backed or promoted by the government.

It is a critique two decades in the making. At Berkshire's 2007 annual shareholder meeting, Buffett called gambling "a tax on ignorance" and described state-sponsored betting as "socially revolting." What is new is the scale of the industry he is now indicting.

A $167 Billion Machine Built on Losing Bets

In 2025, Americans wagered $166.94 billion at legal sportsbooks, an 11% increase from the prior year. Sportsbooks kept $16.96 billion of that as revenue, a nearly 23% year-over-year jump. States collected $3.71 billion in taxes, up 32% from 2024. 40 states and Washington, D.C. now offer some form of legal online sports betting.

Bettors as a group lost roughly $16 billion in 2025. That loss is not randomly distributed across society. Academic research and industry data show that lower-income households spend a greater share of their income on gambling than wealthier ones, a pattern that tax policy experts say governments are well aware of.

The Vig - A Built-In Tax on Every Bet

Before a government collects a single dollar, the sportsbook has already taken its cut. The mechanism is the vig, a commission embedded in the odds that functions like a roulette wheel's green zero. It is invisible to the casual bettor and devastating to the long-term bankroll.

On a standard point-spread bet, you must put up $110 to win only $100, giving the house an edge of roughly 4.5% on every wager. Because of this built-in margin, a bettor needs to win at least 52.38% of bets just to break even.

The national average sportsbook hold rate reached 9.3% in 2024, up from 7% in 2019, thanks to the explosion of high-margin parlays, which carry house edges of 20 to 35%. 

97% of Bettors Lose

Research across multiple studies converges on a sobering figure that only about 3 to 5% of sports bettors are consistently profitable over the long term. Even many of those who claim to be winning are deceiving themselves. Surveys find that 40% of bettors believe they are profitable, while objective data tells a very different story.

The rare long-term winners are a distinct breed. Professional "sharp" bettors approach gambling with the discipline of quantitative traders, deploying statistical models, machine learning algorithms, and rigorous bankroll management to identify market inefficiencies. The best only achieve win rates of around 55%, a margin so thin it requires thousands of wagers and iron emotional discipline to monetize.

Yet even those elite few face obstacles that no other financial market imposes: if they win consistently, sportsbooks simply shut them out. DraftKings, BetMGM, FanDuel, and their peers routinely identify advantage players through algorithmic pattern recognition and reduce their betting limits to as little as 5 or 10 dollars per game. 

A Regressive Tax by Any Other Name

New York imposed a 51% tax on online sportsbook revenues and collected more than $1.2 billion from sports betting in 2025 alone. That is $1.2 billion the state did not need to raise through income taxes. 

Nine US states do not have any form of state income tax, and unsurprisingly, seven of those offer legalized sports betting. Gambling revenues provide politically painless budget relief, that is, for the portion of the electorate that doesn't gamble. The burden falls disproportionately on lower-income households who do.

Higher income tax brackets on earnings above $5 million, increased property taxes on high-value real estate, or estate taxes on inheritances above $10 million would raise comparable revenue from those most able to bear it. Instead, state governments have chosen a revenue stream that extracts billions from working people through the camouflage of entertainment.