1 This paper examines how the current US tax code affects the incentives for taking risk by betting on sports. Research on gambling has also pointed to the role that taxation has played in determining the form and location of betting markets and in affecting the extent of losses experienced by different groups. Classic contributions including Domar and Musgrave ( 1944), Feldstein ( 1969) and Poterba ( 2002). It is well known that the tax treatment of investment gains and losses can have an important effect on risk-taking decisions.
