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One of the largest concerns for the U.S. gaming industry during this year’s legislative sessions has been efforts to increase taxes on sports betting, with tax hikes still on the agenda in New Jersey, Louisiana and North Carolina after an increase was approved in Maryland.
Maryland became the first state in 2025 to officially increase its sports-betting tax rate when Governor Wes Moore, a Democrat, last week signed an annual budget bill into law. House Bill 352 increased the tax rate for sports wagering to 20 percent, up from 15 percent.
However, Moore’s version of the 2026 fiscal year budget he introduced in January, proposed to raise the state’s sports-betting tax rate to 30 percent. Lawmakers and the governor compromised on a 20 percent tax rate.
Moore also proposed an increase to the table games tax rate for the state’s six land-based casinos, increasing it from 20 percent to 25 percent, but that was not included in the bill the governor signed on May 20.
Helene Grady, Maryland's Secretary of Budget and Management, told reporters in January 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. The final budget included nearly $2.3bn in cuts to state programs and more than $1bn in new revenues.
The sports-betting tax increase is expected to generate $32m in new tax revenue in fiscal year 2026.
Sports-Betting Tax Increases Debated
In New Jersey, Democratic Governor Phil Murphy, a Democrat, is seeking an increase in taxes on online gaming and sports betting as part of a series of revenue raises in an effort to close a projected budget deficit.
The governor has proposed a 25 percent tax rate on mobile sports betting and iGaming. Currently, iGaming 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.
Lawmakers who oppose Murphy’s tax increase claim it puts the success of New Jersey’s gambling market at risk, while supporters in the legislature believe raising the tax rates will help the state’s financial stability.
In Louisiana, the House of Representatives voted by a margin of 74-16 late on May 20 to pass House Bill 639 and increase the state's tax rate for sports betting from 15 percent to 21.5 percent of net revenue.
The bill is scheduled for a second reading Tuesday (May 27) in the Senate, where it requires a two-thirds majority.
As introduced, HB 639 would have raised the tax rate from 15 percent to 32.5 percent to align the rates with Louisiana’s video poker industry. However, the bill was amended on the House floor before passage to instead impose a lower increase.
Tax hikes for sports betting are also a topic of discussion in the North Carolina General Assembly, with the House and Senate split on a potential change to the current tax rate of 18 percent.
In April, the Senate approved a proposed two-year, $65bn budget with a 30-15 vote that included raising the sports-betting tax rate to 36 percent from 18 percent.
On May 20, the House of Representatives released its two-year, $66bn budget without a proposal to increase the sports-betting tax rate.
The differences mean budget negotiations are likely headed to a conference committee. In North Carolina, both chambers are supposed to approve a budget by the start of the 2026 fiscal year on July 1.
“I think it is very ambitious, and I think frankly hilarious, that they will get a budget by June 28,” Senate Democratic Leader Sydney Batch told the North Carolina Newsline. Currently, Republicans control both chambers of the legislature in North Carolina.
Colorado Ends Promotional Deductions
Meanwhile, sports betting in Colorado will see a tax deduction for free bets fully eliminated by July 1, 2026, after Governor Jared Polis last week signed a bill that garnered overwhelming support from state lawmakers.
Previously, Colorado's licensed sports-betting operators were allowed to deduct all federal excise taxes paid and a certain percentage of bonuses and other promotions offered to players from their state-taxable revenue.
House Bill 1311, sponsored by House Speaker Julie McCluskie, a Democrat, alongside several co-sponsors, will allow operators to deduct no more than 2 percent of total monthly wagers between July 1, 2025 and December 31, 2025, and no more than 1 percent of handle from January 1 to June 30, 2026.
Beginning on July 1, 2026, the bill will remove any tax deductions for any free bets.
Colorado taxes sports betting at a headline rate of 10 percent of monthly net revenue.
The new revenue is expected to be used to support water initiatives, including conservation programs, and water rights acquisitions.
That is in addition to the $30m that sports betting is on track to generate for water programs this fiscal year.
Ohio Proposed Tax Increase Eliminated
Within the first few weeks of 2025, Republican Governor Mike DeWine proposed to double Ohio’s tax rate on sports betting to 40 percent.
DeWine aimed to use the increased tax revenue to support the funding of new professional sports stadiums. However, the proposed tax increase faced significant opposition from state lawmakers.
Ultimately, the House of Representatives removed the proposed tax hike from the budget earlier this month. The Senate is currently working on the budget, which DeWine must sign into law by June 30.
The current sports-betting tax rate in Ohio is 20 percent, which was doubled from the initial 10 percent shortly after the state launched wagering on games in 2023.
Lawmakers in Indiana, Massachusetts and Michigan have also filed bills to raise sports-betting taxes this year, but those measures have gone nowhere during their legislative sessions.
