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Maryland has become the latest state to increase its sports betting tax rate post-launch, with Gov. Wes Moore approving and signing the bill this week. House Bill 352 was part of the Budget Reconciliation and Financing Act of 2025 and raises the current tax for mobile sports betting operators to 20% from the previous 15%.
While the current rate is higher than it was, it’s still lower than what was initially proposed. In the early version of HB 352, Moore had pushed for a tax hike to 30%, arguing that it aligned with rates in neighboring states. He also sought to raise Maryland’s table game tax from 20% to 25%, emphasizing the need to address the state’s $2.7 billion budget deficit. Despite his strong arguments, the original proposal failed to gain support in the state’s chambers.
Further discussions led to lawmakers approving an amended version, with a lower 20% rate. It passed the House Ways and Means Committee with a 13-5 vote.
Changes to Tax Allocation
The updated tax framework for Maryland sports betting introduces a significant shift in revenue distribution. Now, 5% of all revenue generated from mobile sports betting will be directed to the state’s general fund.
This change comes as part of a broader effort to address Maryland’s financial health, with Governor Moore highlighting the state’s ongoing structural deficit and sluggish economy as key factors driving this new approach.
Meanwhile, the remaining tax proceeds from both online and in-person sports wagering will continue to support the Blueprint for Maryland’s Future Fund, which plays a crucial role in the state’s education reform initiatives. Since legal sports betting began in December 2021, this fund has received over $160 million, underscoring its importance.
While the tax rate for mobile sportsbooks is on the rise, the rate for in-person betting remains steady at 15%, indicating a perceived approach to focus on the rapidly growing digital sports betting sector, which currently generates the majority of revenue.
More States Joining the Trend
Almost halfway into 2025 and various states have already begun reevaluating their sports betting tax policies. Ohio is at the forefront, having doubled its tax rate from 10% to 20% in 2023. Now, Governor Mike DeWine’s budget plan hints at a potential increase to as high as 40%. The state even introduced a new bill last week, which will tax sports betting handle in addition to revenue.
In New Jersey, Governor Phil Murphy’s proposed budget and iGaming tax rates of 25%, a substantial jump from the current rates of 13% and 15%, respectively. Meanwhile, Illinois has already implemented a sliding scale model, taxing operators at either 20% or 40% based on their adjusted gross revenue.
Louisiana is also considering a tax increase aimed at benefiting athletic departments in public universities. The House recently passed House Bill 639 with a strong vote, sending it to the Senate for further deliberation. However, the bill’s success hinges on its connection to House Bill 594, which proposes a flat tax rate on insurance premiums.
North Carolina is also in the mix, potentially following suit with tax hikes similar to those in Maryland and Ohio. In Colorado, a significant change is on the horizon as the state plans to eliminate the ability for sportsbook operators to deduct promotional bets from their taxable income starting next July, further increasing their tax burden.
Source: Next.io
