Maryland Opts for 20% Tax Rate on Online Sports Wagering

Maryland has enacted a higher tax rate on online sports betting revenue. Governor Wes Moore signed House Bill 352 into law, finalizing a rate increase from 15% to 20%. The measure is part of Maryland’s 2025 Budget Reconciliation and Financing Act and is aimed at tackling the state’s projected fiscal shortfalls.

Although Moore originally pushed for a 30% tax rate—arguing it would align Maryland with neighboring jurisdictions and help close a $2.7 billion budget deficit—the legislature ultimately settled on a smaller increase. The House Ways and Means Committee approved the 20% compromise by a 13-5 vote, rejecting Moore’s steeper proposal, which also included raising the tax on casino table games from 20% to 25%.

Revenue Allocation Targets Education Funding

Under the revised tax structure, 95% of the revenue from sports betting taxes will continue to be allocated to the Blueprint for Maryland’s Future Fund, which finances statewide education initiatives. The remaining 5% will go to Maryland’s General Fund.

Retail (in-person) sportsbook operations, however, remain taxed at the previous 15% rate, with only mobile operators subject to the new 20% levy.

Since Maryland launched sports betting in December 2021, the program has contributed nearly $150 million to state coffers. For fiscal year 2025, over $61 million has already been generated, and the new rate is projected to raise an additional $32 million for the budget cycle.

Tax Hike Reflects Growing National Trend

Maryland’s decision to raise taxes on digital betting platforms mirrors developments in other states. In Ohio, lawmakers increased the tax rate from 10% to 20% last year, and proposals are now on the table to raise it again to 40%. Additionally, Senate Bill 199 proposes adding a 2% tax on the total wagering handle.

Louisiana is considering a similar increase to collegiate athletic programs, while New Jersey Governor Phil Murphy has introduced a budget proposal that would raise online sports betting and iGaming taxes to 25%, up from the current 13% and 15%, respectively.

Illinois has already enacted a variable tax structure with rates reaching as high as 40%, depending on an operator’s adjusted gross revenue. Meanwhile, Colorado is preparing to eliminate deductions for promotional bets, which will further raise the effective tax rate for sportsbooks starting next July.

Operators Brace for Revenue Impact

Industry leaders have expressed concerns about the growing tax burden. DraftKings recently forecasted that anticipated tax and regulatory adjustments—including Maryland’s increase—could reduce its 2025 revenue by as much as $30 million.

Nonetheless, these changes reflect a broader shift among states looking to stabilize budgets and fund essential public services by tapping into the booming sports wagering sector.

With Maryland becoming the first state in 2025 to implement a new sports betting tax rate, it sets the tone for similar fiscal strategies likely to unfold across the country in the months ahead.

Source:

“Maryland the latest state to up the sports betting tax rate post-launch”, sbcamericas.com, May 21, 2025