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Maryland Governor Wes Moore’s proposal to double the tax rate on sports betting to help close a multibillion-dollar budget deficit has been pared back, but some local industry executives believe tax increases could be revisited in the future.
Moore, a Democrat, unveiled his executive budget proposal in January. It included doubling Maryland’s sports-betting tax rate to 30 percent from its current 15 percent of gross revenue.
However, after discussions with members of the state legislature, the final budget framework released last week contained a smaller increase of 20 percent.
The budget agreed upon by Moore and legislative leaders will also keep Maryland's tax rate on table games at the current 20 percent, after the governor initially proposed raising it to 25 percent.
Helene Grady, Maryland's Secretary of Budget and Management, told reporters at a January news conference in Annapolis that the proposed increase in the sports-betting tax rate from 15 to 30 percent “seems like a big jump, but many of our neighboring states are significantly higher than 15 percent today”.
Moore proposed doubling the sports-betting tax rate to help close a $3.3bn budget deficit.
“I think as to the point of the needs in Maryland for funding, this will always be an issue,” Ryan Eller, executive vice president and general manager of the Cordish Cos.-owned Live! Casino & Hotel Maryland, said Friday during a seminar on gaming held at Morgan State University in Baltimore.
Eller added that even though the budget agreement includes a more limited increase, which is far less than the original doubling to 30 percent, “it won’t be the last time” the issue is discussed in Annapolis.
“There will be tax rate issues that come up every session … and it will be a negotiation,” Eller said. “Hopefully, Maryland can grow its way out of the issues that we currently encounter through a variety of means. That’s definitely in the long-term.”
The Maryland legislature must approve the budget by April 7.
Moore’s budget will be discussed in both chambers of the state General Assembly before its passage, but Darryl Barnes, a Democrat and former member of the Maryland House of Delegates, does not expect the proposed sports-betting tax increase to change again.
Barnes said Maryland is facing a $3.3bn deficit, and if “we don’t get ourselves under control by 2028, we’ll have a $6bn debt”.
“I believe that there’s conversation on that 20 percent holding,” Barnes said. “Simply because if we go higher than that, I think it hurts those that are involved. I think we have to hold where we are. Those are the conversations that I’m having with my (former) colleagues in Annapolis now, on staying where we are and making sure we don’t raise that number.
“If we continue to try and tax our way out of this thing, we’re only hurting ourselves,” Barnes added.
Maryland launched sports betting in late 2021. With a 15 percent headline tax rate, retail and mobile sports wagering has since contributed some $150m toward education funding. The increased tax revenue raised from the additional 5 percent will go to the state's general fund.
Currently, Maryland has 11 mobile and 13 retail sportsbooks.
Sports-Betting Tax Increases
Maryland would not be the first state to raise its sports-betting tax rate.
In 2023, Ohio Republican Governor Mike DeWine was able to push through the state legislature a doubling of the tax rate to 20 percent from 10 percent.
Last month, DeWine released a state budget plan that proposed a further increase to 40 percent, doubling the rate for the second time in three years. Several Ohio lawmakers, however, have signaled their opposition to DeWine’s proposal.
In 2024, Illinois lawmakers approved a new tiered tax system ranging from 20 percent to 40 percent of revenue, up from the original 15 percent.
Meanwhile, opposition to New Jersey Governor Phil Murphy's proposed 25 percent tax rate on mobile sports betting and online gaming is mounting as lawmakers and gaming industry executives believe the increase threatens the industry's stability.
Murphy proposed the increase as part of his executive budget proposal, which was unveiled on February 25.
Currently, iGaming revenue is subject to a state tax rate of 15 percent, while mobile sports betting is taxed at 13 percent. According to the Murphy administration, the increases would generate more than $402m in new tax revenue.
