Maryland edges towards smaller tax rise on sports betting
Maryland is moving ahead with a tax hike on sports betting, though not as steep as first planned. The rate will rise from 15 to 20 percent — a five-point jump that marks a compromise between Governor Wes Moore and state lawmakers.
Originally, Moore sought to double the rate to 30 percent in a bid to close a projected budget deficit of $3.3 billion (£2.6 billion / €3.05 billion). His January budget proposal also called for an increase in the tax on table games from 20 to 25 percent. The governor/legislature has abandoned that idea. The 20 percent rate on table games will remain untouched.
The scaled-back plan was released as part of a revised budget agreement reached last week between Moore and legislative leaders. It follows weeks of political wrangling in Annapolis, where concerns were raised over the effect of a steep tax increase on local operators.
Helene Grady, Maryland’s Secretary of Budget and Management, acknowledged in January that the jump from 15 to 30 percent was steep but argued it aligned Maryland with nearby states that impose higher rates on sports wagering.
“The proposed increase in the sports-betting tax rate from 15 to 30 percent seems like a big jump,” Grady said at a press conference earlier this year. “But many of our neighbouring states are significantly higher than 15 percent today.”
With the 30 percent proposal now off the table, some in the industry believe this will not be the last time the subject returns.
Casino operators expect more tax talks in future sessions
“I think as to the point of the needs in Maryland for funding, this will always be an issue,” said Ryan Eller, executive vice president and general manager of Live Casino and Hotel Maryland, owned by The Cordish Companies. Speaking at a gaming seminar hosted at Morgan State University on Friday, Eller added that although the current increase is smaller, “it won’t be the last time we debate the issue.”
“There will be tax rate issues that come up every session,” he said. “It will be a negotiation. 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 is required to pass the budget by 7 April. The current version is expected to remain largely intact as it moves through both chambers of the General Assembly.
Darryl Barnes, a Democrat and former delegate in the Maryland House, said he does not expect any further changes to the sports-betting tax rate.
“I believe that there’s a conversation on that 20 per cent 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.”
Budget pressure mounts as deficit forecasts worsen
Barnes warned that more aggressive tax plans could harm operators and prove counterproductive.
“If we continue to try and tax our way out of this thing, we’re only hurting ourselves,” he said. “We’re already facing a $3.3 billion deficit. If we don’t get ourselves under control by 2028, we’ll have a $6 billion debt.”
Sports betting launched in Maryland in late 2021. Since then, the state’s retail and mobile operators have generated over $150 million in tax revenue, with the lion’s share directed towards education funding. The extra five percent from the new tax rate will be funnelled into the general fund instead.
Maryland currently hosts 11 mobile sportsbooks and 13 retail locations and recently released updated lists of licensed online sports wagering operators and registered online fantasy competition operators authorised to operate within the state.
Other states push tax rates higher
Maryland is not alone in pursuing higher taxes on sports betting. Across the country, several states have already enacted increases, with more proposals currently under review.
Ohio raised eyebrows in 2023 by doubling its sports-betting tax rate from 10 to 20 percent. Now, Governor Mike DeWine is pushing to double it again. His latest budget plan includes a proposed increase to 40 percent, marking a dramatic rise in just three years. But the plan has already faced resistance from state lawmakers.
Last year, Illinois followed a different path, introducing a tiered system that taxes sports-betting revenue between 20 and 40 percent, depending on operator earnings. That replaced the state’s former flat rate of 15 percent.
In New Jersey, Governor Phil Murphy is also drawing fire for his proposed 25 percent tax rate on both mobile sports betting and online casino gaming. His February budget announcement triggered concerns from industry leaders, who say the hike could destabilise a mature market.
New Jersey’s current rates sit at 13 percent for mobile sports wagering and 15 percent for iGaming. Murphy’s office said the proposed increase would generate more than $402 million in new tax revenue.
As budget gaps widen and political pressures mount, states across the US are turning to gaming revenue for answers. For Maryland, the compromise deal may buy some time. But, few in the industry expect the issue to stay off the agenda for long.
