Taxation in the U.S. gaming industry has long been a complex issue, but for iGaming operators, its becoming increasingly nuanced. As more states legalise online gambling, operators face another set of tax rules, compliance hurdles, and reporting standards to figure out. Theres no single template for tax laws anymore. Every state demands its own playbook.
Online gambling is growing fast, and tax laws arent standing still. Operators must keep up with constant changes, or theyll feel it in their bottom line. With tax rules changing state by state, operators are stuck adjusting to an inconsistent rulebook. Some states tighten the screws, while others offer more breathing room.
iGaming tax laws arent slowing down in 2025so whats next? Which new policies will impact operators the most? And how do they stay compliant without tripping over regulatory hurdles?
This exclusive three-part series from SiGMA News features expert insight from Robert Stoddard, KPMGs Lead U.S. Tax Partner for the gaming industry, offering operators clear insight on how to stay compliant, adapt to crypto-driven change and expand smartly across borders in an increasingly unpredictable tax landscape.
No two states, no one rulebook
Unlike Europe, where gambling taxation follows a relatively centralised structure, the U.S. operates on a state-by-state basis. Theres no standard playbook. One state may hit you with steep taxes, another with fees, and all expect different reports on your revenue.
Its a constant balancing act for operators. They are stuck juggling tax changes, clashing state rules, and compliance checks that never stay the same for long. A company licensed in New Jersey plays by an entirely different tax rulebook than one in Pennsylvania or Michigan. Two states might share a border but not a rulebook.
- New Jersey taxes online 바카라 revenue at 15 percent, but charges only 8.5 percent on retail sports betting.
- Pennsylvania, on the other hand, imposes a 54 percent tax on online slots revenue. This significantly affects operator margins.
- New York continues to apply one of the highest tax rates on mobile sports betting at 51 percent, sparking concerns about sustainability.
Get the planning wrong, and youre not just out of step: youre facing fines, delays, and a serious dent in your bottom line.
Multi-state compliance is a growing challenge
Multi-state compliance presents some of the most significant challenges for iGaming operators. A licence opens the door, but the real complexity starts once the tax rules kick in. Each state brings new tax rules and reporting regulations, requiring operators to continuously adapt their approach.
Heres where operators start to feel the strain:
- Wild tax swings C No two states tax iGaming the same way. Some take a modest cut. Others assess a high tax rate or may significantly limit deductions against the tax base. That means operators are constantly revisiting their pricing and adjusting revenue forecasts, often on the fly.
- 바카라er tax paperwork C Some regulators want full records for every payout. Others barely mention it. The lack of consistency makes it harder to stay compliant without drowning in admin.
- Indirect taxes C Gaming tax is just the start. Theres sales tax, excise tax, and state rules that force operators to chip into safer gambling funds, whether theyve planned for it or not.
- Different tax bases C Certain states calculate tax based on gross gaming revenue (GGR), while others use net gaming revenue (NGR), creating further complexity in financial forecasting.
- Cross-border complications C Companies working across borders need to tread carefully. One wrong move, and theyre looking at double taxation or treaty trouble.
Even well-established brands have faced legal scrutiny over misinterpreting state-specific tax laws. Operators risk incurring hefty penalties or being forced into expensive retroactive tax payments without proper tax structuring.
What new tax rules could shake up iGaming next?
Several important developments in U.S. gaming taxation are expected to shape the industry in the coming years:
- Federal Scrutiny on Digital Gambling Transactions C The IRS is paying closer attention to how online gambling winnings are taxedand operators could soon face tougher reporting rules.
- Increased State Taxation Proposals C Particular states want a bigger cut from iGaming, and higher tax rates are on the table. But push too hard, and operators might start looking elsewhere.
- Tax Reforms in Key States C New Jersey, Illinois, North Carolina, and Indiana are currently debating tax structure revisions, with potential shifts in rates and deductions that could impact operators.
- Growth of Revenue Sharing Models C Some states are ditching flat tax rates in favour of revenue splits, and that shift could hit profits and mess with long-term planning.
- Uncertainty Related to CFTC Sports Events & Exchange Betting C In recent months, there has been much discussion regarding the offering of CFTC-regulated sports events contracts, particularly in conjunction with the Super Bowl and other subsequent major events, including March Madness and The Masters. The potential tax implications for such contracts are also a developing conversation, especially with the evolving legal & regulatory environment in the space.
Operators who arent paying attention risk falling behind fast. Staying compliant means moving quickly when the rules shift.
Building a smarter tax plan that works
Knowing the rules isnt enough. Operators need a proper strategy to stay one step ahead. has developed tailored tax strategies to help iGaming operators manage multi-state compliance efficiently.
- Tax Efficiency Reviews C Assessing current operations and future plans to identify potential tax savings.
- State-Specific Structuring C Developing strategies for structuring businesses to reduce income and indirect tax obligations while maintaining full compliance with applicable regulations and tax laws.
- Exit Planning & Due Diligence C Preparing operators for potential acquisitions, mergers, or regulatory changes that could affect tax liabilities.
- International Coordination C Helping global operators entering the U.S. market understand key federal and state tax matters, cross-border tax considerations and avoid common pitfalls.
A clever tax plan doesnt just keep iGaming operators out of trouble. It can protect margins and help them stay competitive, even with U.S. tax rules shifting constantly. Latin America is also grappling with similar questions, as seen in the regions ongoing policy and taxation challenges in online gambling.
A constantly moving target
In the U.S., iGaming tax laws dont stay the same for long. With new gambling rules and shifting tax rates, operators must remain at the top of their game or pay the price.
What matters most? Staying informed, leaning on the right experts, and keeping your tax strategy ready to shift when the rules do. Staying ahead of multi-state tax rules, looming rate increases, and federal scrutiny isnt easy, but the right game plan can separate success from costly legal headaches.
One thing is sure. Standing still is not an option when it comes to U.S. iGaming taxes.
So, whats next? In Part 2, Robert Stoddard dives into the crypto conundrum where digital assets meet outdated tax codes, and operators are left guessing.
*Robert is a Partner in KPMGs Stamford Business Tax Services practice with 23 years of experience in tax planning, compliance, and income tax provisions. He has served domestic and multi-national clients in a wide range of industries and is currently the lead tax partner for KPMGs U.S. Gaming practice.?
