As the fledgling sports betting industry begins to mature across the country, some states want a larger piece of the action. Some are reassessing the tax rates they put in place as they see sportsbooks’ profits rise exponentially.
Just seven months after launching sports betting last year, Ohio doubled its tax rate from 10% to 20% beginning in Fiscal Year 2024-25. New Jersey is also looking to essentially double its rate, from 14.25% to 30%.
And recently, Illinois Gov. JB Pritzker has proposed upping the rate in his state from 15% to a whopping 35%.
The question is, will Maryland follow their lead?
March Sports Betting 40% Higher Than a Year Earlier
Voters approved Maryland sports betting in November 2020. A year later, retail sportsbooks opened in the state. A year after that, online sports betting began.
As in most other states, sports betting took off in Maryland. In March, for example, Maryland sportsbooks took in $536.7 million in handle. That was nearly 40% more than March 2023. It resulted in just over $32 million in taxable adjusted revenue for the sportsbooks and $4.9 million in tax revenue for the state and local entities.
Maryland taxes sportsbook operators at 15%.
While there’s been no official discussions about raising the tax rate on sports betting, state officials are always looking for more revenue. Lawmakers are considering legalizing Maryland online casinos as a way to collect more dollars from gambling in the state. As they see other states raising their rates on sports betting, they may be looking to follow suit in the near future.
Consequences of Higher Tax Rate on Sports Betting
The most logical outcome from states raising their tax rates on sports betting is that operators will take in less profits. On the surface, that probably seems acceptable to most sports bettors. Why should they care if sportsbooks make less off their bets?
Furthermore, more tax revenue should mean better programs and services for their communities.
The Sports Betting Alliance, a group consisting of four of the industry’s biggest sportsbooks, explains on its website how bettors will be adversely impacted by rate hikes.
Some operators will begin offering worse odds, meaning players will win less from their bets. And some could eliminate or reduce many of their promotional offerings or bonuses. Most Maryland sportsbooks offer first-time customers deals like “No Sweat Bets” and hundreds of dollars in bonus bets. Some give special offers to frequent bettors.
The Sports Betting Alliance believes these moves could result in customers looking for other betting options. Some would seek illegal offshore operators, which in turn would result in less money for state coffers.
Will Maryland Increase Tax Rate on Sports Betting?
As mentioned above, there have been no official discussions from lawmakers over raising the tax rate on sports betting in Maryland.
But as they continue to receive pushback on adding online casinos, legislators may turn their attention to taking a bigger piece of the tasty sports betting pie.
Hopefully, they will consider all the consequences that would come from raising the rate. It would be unfortunate to see a successful industry in the Old Line State diminished by greed.
