As first reported by WAFF in Huntsville, an Alabama professor has highlighted that revenues generated from establishing a state lottery could replace the tax revenue lost if the state’s grocery tax were completely removed. Currently, the state of Alabama brings in between $230 million and $270 million annually from the grocery tax, making the search for a sustainable funding source the primary legislative hurdle. However, with potential state lottery revenues estimated between $200 million and $300 million, a lottery could effectively offset the lost funding for state programs and education.
Under current state law, traditional commercial gambling and lotteries remain illegal in Alabama. Utah and Hawaii stand out as the only two states that maintain an absolute ban on all forms of gambling, while Alabama remains one of a shrinking handful of states without a state lottery.
Online Wagering and Unregulated Markets
Despite the strict prohibition on brick-and-mortar operations, gambling in Alabama has not stopped; it has simply moved online. A significant number of residents routinely turn to digital platforms for sports betting or trade event contracts on prediction market platforms such as Kalshi. Because these activities occur outside a state regulatory framework, untaxed dollars flow continuously out of Alabama to offshore sites or neighboring states that have already legalized and taxed gaming.
For the past two decades, politicians across various political campaigns have routinely promised to put the issue of legalized gambling and a state lottery to a statewide vote. However, despite repeated legislative introductions and public assurances, bills consistently stall in Montgomery before citizens ever get the opportunity to cast a ballot on a constitutional amendment.
The Case for Taxing Existing Behavior
Given that Alabamians are already placing bets and participating in market speculation online, establishing a legal, regulated structure to tax these existing activities alongside an official state lottery presents a logical policy transition. By capturing tax revenue from gaming that is already taking place—estimated at $200 million to $300 million—the state could secure a reliable income stream to replace the $230 million to $270 million generated by the regressive tax on food, placing money directly back into the pockets of working families.
What Do You Think?
Should Alabama voters finally get the chance to vote on a state lottery if it means ending the grocery tax once and for all?
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