The Olympics Are a Massive Tax Boondoggle

PLUS: Model state legislation for states to lower utility costs.

Photo credit: Nick Leonard

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While simultaneously watching the Winter Olympics and perusing the latest batch of state-level legislation to have been introduced last week, I noticed that a Utah state representative introduced a bill to exempt tickets to the 2034 Winter Olympics in Salt Lake City from Utah’s sales tax.

I don’t know the bill’s chances, but the fact that it exists at all is a reminder of two interrelated concerns: The Olympics (and most international sporting events) are a massive tax boondoggle, which directly undermines the argument that there is a worthwhile economic benefit provided to Olympic host cities, even though said economic benefit is the chief way in which Olympic boosters convince cities to play host in the first place.

As I explained in my book, this newsletter, and plenty of other places, the claim that the Olympics improve the host city’s economy is a lie. The costs of hosting are astronomical — and always run overbudget — while the returns are minimal. Job creation tends to underwhelm, and tourism effects are muted by the fact that many visitors who would go to a specific place under normal circumstances choose not to because of the Olympics, meaning Olympic tourists aren’t adding to the pie, but simply replace economic activity that’s been lost. (Remember, these events usually take place in well-known tourist destinations!)

All in all, the empirical evidence — that isn’t bought and paid for by the sports subsidy industrial complex, that is — shows the Olympics are a big economic bust.

So it will likely be again in Salt Lake City, which when it hosted the 2002 Winter Games only received 10 percent of the promised job creation and did not experience an increase in hotel occupancy or passenger flight arrivals, consistent with the notion that Olympic visitors simply displaced other winter tourists who would have come anyway. (Lots of people like to visit Utah in the winter!)

Doling out tax breaks further ensures that the economic impact from hosting the games will be a blip, as it gives away any wisp of financial upside that might exist to the states or localities involved. And there are a lot of tax breaks when it comes to the Olympics.

The International Olympic Committee — one of the most venal, corrupt, incompetent sporting organizations on the planet, which is saying a lot — demands not only that all of its activities go untaxed, but that official games sponsors, i.e., the corporations that sell everything provided at the games, also go untaxed, as do the media organizations that broadcast the games, and anyone connected to the games who does any work.

Here’s the relevant section of the agreement between Los Angeles and the IOC for the 2028 Summer Games that lays this all out.

Again, if you have to agree to exempt away all the revenue you might conceivably collect from the presence of the games, one of the chief avenues for generating an economic impact is negated right away, before the games even occur

During the 2012 London Summer Olympics, a bunch of global corporations, including Coca-Cola and McDonald’s, actually won a round of positive press stories by turning down the tax exemptions the IOC demanded on their behalf. No such luck before or since, though, with these dominant retailers happily pocketing the tax-free bonanza — and then retreating back to wherever they’re headquartered with their tax-free gains.

It’s not actually clear to me that waiving the sales tax on tickets is required for Utah, as it appears that Italy’s value-added-tax is being applied to tickets for the ongoing Milan-Cortina games. This is consistent with the notion that the IOC cares about tax breaks for its corporate partners, not the folks who are actually attending the games. In fact, it’s apparently quite common for hosting countries to gouge tourists with taxes — which makes sense! They need to try to make up all that lost revenue somewhere!

But promising to waive sales taxes for big U.S. sporting events is a bit of a trend, even in the absence of a direct demand. For example, tickets to the 2026 World Cup games in Kansas City are already exempted from Missouri’s sales tax, under a law signed back in 2022. Exempting tickets from sales taxes is a way for politicians to make it look like they are doing something to help their constituents access these events, while undermining the localities they live in on the back end by depriving them of the sales tax revenue that might offset some of the costs they incur.

In recent years, far fewer cities have stepped forward to host the Olympics and other major sporting events, amid a growing recognition that the demands and costs far outpace the benefits. This week, Foxboro, Massachusetts, even refused to grant an entertainment license to FIFA, soccer’s world governing body, for the 2026 World Cup because it’s unclear whether and how the city will be reimbursed for security costs.

So localities getting bossed over big sporting events is not necessarily inevitable, if local leaders use the leverage granted to them by the fact that these events need to be somewhere, and there are increasingly few takers. It would be great if more leaders asked what organizations such as the IOC and FIFA can do for them, rather than bending over backward to give away what few pennies they might hope to collect.

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SHAMELESS SELF-PROMOTION: The American Economic Liberties Project, where I work, released new model legislation this week for states to rein in utility costs. The goal of the legislation is to tie the hands of corrupt monopoly utility regulators and implement a new rate-setting process that includes market-based data points — determining what investors would receive to invest in utility corporations on the open market — “rather than a continued reliance on outdated and skewed financial models used by utilities to justify decades of unreasonable profits.” Read the full model legislation here.

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SIMPLY STATED: Here are links to a few stories that caught my eye this week.

• The Trump administration is trying to kill an AI transparency bill in Utah.

• Several states are considering regulating or abolishing prediction markets, where bettors gamble on various events, though federal regulators are pushing back.

• A Michigan state senator proposed banning stock buybacks at corporations that receive state tax incentives.

• The Ohio attorney general has sued nine cannabis operators, accusing them of a conspiracy to keep prices elevated.

• Los Angeles County sued two fire truck manufacturers, similarly accusing them of a conspiracy to keep prices elevated.

• Georgia is anticipating losing $2.5 billion to data center tax breaks in fiscal year 2026, which is 664 percent higher than the previous estimate.

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— Pat Garofalo