U.S. sports betting operators push back against relentless tax hikes
The battle over sports betting taxes is heating up across the U.S., with major operators bracing for a wave of proposed tax hikes. In just the first few weeks of 2025, governors from two key sports-betting states have announced plans to double tax rates, raising concerns across the industry.
Ohio and Maryland lead the charge on tax increases
Ohio Governor Mike DeWine kicked things off with a proposal to raise the states sports betting tax to 40%, doubling it for the second time in three years. He argues that the increased revenue would be used to fund new professional sports stadiums. Ohio citizens are giving, every single day, millions of dollars to the sports gaming companies, DeWine said, defending his plan.
Meanwhile, Maryland Governor Wes Moore followed suit, suggesting a tax hike from 15% to 30% as part of his budget plan. Maryland is currently facing a $3 billion budget shortfall, and Moores administration sees sports betting revenue as a way to help close the gap. His 2026 budget proposal estimates that the increase would generate $95.4 million in revenue.
Why are states raising sports betting taxes?
The trend of increasing sports betting taxes has been gaining traction since Illinois raised its tax rate last year. Experts believe several factors are driving this shift. Bob Stoddard, a gaming tax expert at KPMG, points out that many states are struggling with budget deficits following the end of federal COVID-19 relief programs. With reduced federal funding expected under the new Trump administration, states are scrambling for alternative revenue sources.
I also dont think its a coincidence that many states proposing tax-rate increases on OSB [online sports betting] and/or iGaming are directly adjacent or geographically close to New York and Pennsylvania, where the rates are already high, Stoddard told . He added that some legislators believe higher tax rates wont negatively impact betting volume and that sports betting taxes are less controversial than other tax hikes.
The industry pushback
Not surprisingly, the gaming industry isnt taking these tax hikes lightly. DraftKings CEO Jason Robins addressed the issue during a call with Wall Street analysts on February 14, making it clear that his company isnt budgeting for any tax increases just yet. Right now, theres no reason to bake in higher tax rates because no state has actually increased our tax rate this year, he said. Obviously, thats something that could change and something that we are very focused on from a government affairs standpoint.
In both Ohio and Maryland, these proposals still need to clear the state legislature, and theres a chance they could be softened or rejected altogether. Ohio House Finance Committee Chairman Brian Stewart has already expressed scepticism about another tax increase so soon, suggesting lawmakers might not be on board.
MGM Resorts CEO Bill Hornbuckle also weighed in, revealing that his company met with Marylands Governor Moore to discuss the proposed tax hikes. According to Hornbuckle, Moore seemed willing to reconsider raising taxes on 바카라 table games but was less flexible about mobile sports betting. As it relates to digital [gaming and sports betting], I think it’s going to be an ongoing game, Hornbuckle said. I think there are markets that get it. There are markets that want to see true growth and keep it onshore versus offshore and theres a couple of states I think we’ll continue to battle.
More states could follow
While Ohio and Maryland are currently in the spotlight, theyre unlikely to be the only states looking to increase taxes on sports betting. Lawmakers in Indiana, Louisiana, Michigan, and Massachusetts have all recently proposed similar tax hikes. Given that 47 states must pass new budget laws this year, theres plenty of opportunity for tax changes to be introduced during the legislative process.
One state to keep an eye on is New Jersey. Governor Phil Murphy is reportedly considering increasing taxes on online gambling to help fill a projected $3.7 billion budget gap. His 2025-26 budget proposal is set to be released on February 25, and many in the industry are watching closely to see if New Jersey joins the trend.
Industry leaders keep fighting for lower taxes
DraftKings Robins described this phase of state budget negotiations as the sausage-making stage of the legislative process. Theres a whole lot of things that happen between now and when ultimate decisions get made on which states want to move forward with new legislation or anything else including tax decisions, he told analysts. He emphasised that the companys lobbying team is working hard to advocate for what they see as fair tax policies, ones that encourage legal sports betting while keeping tax rates competitive.
States considering expansion
While some states are looking at tax hikes, others are still trying to get sports betting off the ground. Minnesota seems closest to legalising, with tribes pushing for control over mobile betting and racetracks demanding a cut of the tax revenue. If lawmakers can reach an agreement, Minnesota could soon become the next big market.
Texas, on the other hand, remains a tough sell. Lt. Gov. Dan Patrick is firmly against legalisation, and Republican support in the state Senate is weak. Even though public demand is high and sports betting could bring in billions in revenue, political resistance continues to stall progress.
Georgia also faces an uphill battle. After multiple failed attempts, the latest push for legalisation stalled in 2024. Some lawmakers argue that a constitutional amendment is needed, while others believe standard legislation would suffice. Either way, chances for legalisation in 2025 seem slim, and Georgia remains one of the last holdouts in the region.
The bottom line
With tax hikes on the table in multiple states and expansion efforts still ongoing in others, the U.S. sports betting industry is in a period of major transition. While operators are fighting to keep tax rates reasonable, lawmakers see betting revenue as an easy way to fill budget gaps. As legislative sessions unfold, the industry will be keeping a close watch on which way the scales tip.
