Dialing Up the Stakes: A Rising Trend in Sports Betting Taxes
Hear it from the horse's mouth by Michael Savio - April 17, 2025
Increasing Proposed Tax Rate for Sports Betting Operations in North Carolina
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Racing Toward Higher Taxes
States across the US are ramping up the tax burdens on sportsbooks in a bid to reap higher state revenues. Let's take a look at some noteworthy proposed and implemented tax increases.
- North Carolina, on the verge of doubling its current tax rate from 18% to 36%, aims to significantly reshape the market for operators while boosting its coffers. The proposed change, scheduled for effect on Oct 1, also sets aside funds for university athletic departments to support Division I student-athletes1.
- Illinois sports a progressive tax structure, with a maximum rate of 40% on monthly revenues above $200 million and a minimum tax rate of 20% on a sliding scale. This high-tax environment caters to large operators while keeping the tax burden reasonable for smaller ones1.
- Massachusetts is contemplating a dramatic tax hike from 20% to 51%, tying it with New York and New Hampshire for the highest sports betting tax rates in the US1.
- Other states like Maryland and New Jersey are considering similar tax increases, indicating a broader shift across the nation toward higher taxes on sports betting revenue1.
A Quick Comparison
- Arkansas taxes sportsbooks at 13% on the first $150 million in revenue and 20% on revenue beyond that, employing a tiered approach that sets it apart from other states3.
- High tax rates, such as New York's 51%, have long been a source of frustration for sportsbooks, potentially limiting market expansion and pushing for rate reductions over time2.
The Cash Flow Race
The rising tide of tax rates is injecting substantial government coffers with legalized sports betting revenue. North Carolina, for instance, has already raked in around $135 million in tax revenue since legalization, averaging $10.4 million monthly1.
Yet, high tax rates may present challenges for sportsbooks, potentially impacting profitability, competition, and market expansion. Some operators, finding New York's 51% rate suffocating, are calling for rate reductions2.
Forging Ahead in the Sports Betting Landscape
The tug-of-war between states striving to optimize their cut of the growing sports betting market and operators juggling profitability creates an exciting dance. As regulations evolve, so will the opportunities for growth and change.
Stay tuned for more insights from Michael Savio on this fast-paced landscape. Until then, remember: the chips may be down, but the game is far from over.
- Michael Savio, an influential figure in the online casino industry, discusses the rising taxes on sports betting in various states, including North Carolina, which is planning to double its current tax rate from 18% to 36%, hoping to reshape the market while boosting its finances.
- In comparison, states like Massachusetts and Maryland are considering similar tax increases, aiming to match high rates like New York and New Hampshire's 51%, which have been sources of frustration for sportsbooks due to potential limitations on market expansion.
- As the sports betting landscape continues to evolve with these tax changes, operators might face challenges in terms of profitability, competition, and market expansion, with high tax rates potentially impacting their businesses significantly.
