Five U.S. States Eye Sports Betting Tax Hikes: CasinoLogia Weighs In

Five U.S. States Eye Sports Betting Tax Hikes: CasinoLogia Weighs In

North Carolina is leading with Senate Bill 257, which aims to double the sports betting tax rate from 18% to a hefty 36%, effective October 1, 2025. This substantial increase, part of a $65 billion budget, has already cleared the Senate and is awaiting House approval, with the additional funds earmarked for public education and youth programs. This aggressive move highlights the state's significant reliance on new revenue streams from its recently launched sports betting market to address critical public spending needs.

The proposed rate places North Carolina among the highest-taxed sports betting states, a fact that has drawn sharp criticism from operators who fear its impact on market competitiveness and player engagement. Indeed, the North Carolina House of Representatives' budget proposal notably does not include this tax rate increase, suggesting a potential legislative showdown between the two chambers. Operators are particularly concerned that such a high tax could limit their ability to offer competitive odds and promotional bonuses, potentially pushing bettors towards unregulated offshore sites.

With the state's online sports betting market having just launched in March 2024 and already surpassing initial revenue projections, the industry argues that the current 18% rate is already proving highly effective in generating substantial funds

In Maryland, House Bill 352, enacted in May 2025, raised the mobile sports betting tax from 15% to 20%. While not as high as Governor Wes Moore's initial 30% proposal, it's still a notable hike, with proceeds largely benefiting schools. This moderate increase represents a compromise between the state's desire for more funding and the industry's concerns about over-taxation, reflecting a careful balancing act.

The focus on school funding underscores a common legislative strategy: leveraging new gambling revenues to support popular public initiatives. The revised 20% rate aims to bring Maryland more in line with some neighboring states, while 95% of the online sports betting tax revenue will continue to flow into the “Blueprint for Maryland's Future Fund” for public education, with the remaining 5% directed to the state's general fund.

This adjustment, though significant for operators, is projected to generate substantial additional revenue for the state, contributing to the continued funding of critical educational programs. For players, while the immediate impact might not be as severe as a higher tax rate, the increased burden on operators could subtly translate into less generous promotions or slightly less competitive odds over time.

Louisiana's House Bill 639, passed by the House in May 2025, also seeks to increase the online sports betting tax from 15% to 21.5%. This figure was revised down from an earlier 32.5% plan after considerable pushback from the industry. This revision highlights the significant lobbying power of sports betting operators, who actively engage in legislative processes to safeguard their profit margins. Ultimately, the approved rate represents a negotiated middle ground, aiming to secure more state revenue for initiatives like public college athletics and support for students with disabilities, without completely stifling the nascent market's growth.

Indeed, the bill has since been signed by the Governor and became effective on August 1, 2025, solidifying Louisiana's new tax structure. A key component of this legislation is the establishment of the Supporting Programmes, Opportunities, Resources, and Teams (SPORT) Fund, which will receive 25% of the online sports betting tax revenues, directly supporting athletic departments at Louisiana's NCAA Division I universities. This dedicated funding stream underscores a national trend where states are increasingly tying gambling revenue to specific public programs, particularly as collegiate athletics navigate new financial landscapes.

Ohio saw Governor Mike DeWine's proposal to double the tax rate to 40% rejected in April 2025. However, a new bill, Senate Bill 199, introduces a 2% tax on all bets placed, in addition to the existing 20% operator tax, subtly shifting some of the burden onto the betting handle itself. This novel approach makes Ohio potentially the first state to implement a dual taxation model on both gross gaming revenue and the total betting handle.

Such a structure could significantly increase the effective tax rate for operators, particularly those with lower hold percentages, potentially forcing them to reassess their operational strategies in the state. The funds generated by this additional 2% tax are specifically earmarked for the maintenance and upgrading of publicly owned professional sports facilities, as well as supporting interscholastic athletics and public school extracurricular activities. While the direct impact on individual bettors might seem minimal at 2% per wager, it represents an added layer of cost that could influence betting behavior over time.

The ongoing legislative debate in Ohio reflects a continuous search by states for optimal revenue generation from sports betting, balancing the desire for higher tax receipts with the need to maintain a competitive and attractive regulated market.

Meanwhile, New Jersey's Governor Phil Murphy proposed a 25% tax on both sports betting and online casinos (up from 13%) in his 2026 budget. While facing strong industry resistance, recent reports indicate New Jersey lawmakers have agreed to a revised increase to 19.75% for both sports betting and online casinos, up from their previous rates of 13% and 15% respectively.

The state is striving to finalize its budget by June 30, 2025. As of June 30, 2025, New Jersey lawmakers have indeed approved legislation including these increased rates, which will take effect with the new fiscal year beginning July 1st. This compromise signals a win for operators who avoided the more drastic 25% hike, yet still provides the state with a significant boost in revenue for its Casino Revenue Fund, which supports senior citizens and individuals with disabilities programs.

The increased tax is projected to generate over $200 million in additional funds for the state in the upcoming fiscal year, reflecting New Jersey's continued reliance on its robust iGaming and sports betting markets to meet budgetary needs.

What This Means for Players and the Industry

From our perspective, these tax increases are a double-edged sword. While states gain much-needed revenue for public services, the sports betting industry argues that higher taxes force operators to offer less competitive odds, fewer appealing promotions, and reduced investment in the legal market. This could, unfortunately, push consumers back to unregulated, offshore betting platforms – a scenario that undermines responsible gambling efforts and the very goal of increased state revenue.

We will continue to monitor these legislative developments closely, as changes in one part of the gambling industry often have ripple effects across others, including the online casino sector.

What are your thoughts on these proposed tax hikes? Do you think they will negatively impact the player experience or effectively boost state funding? Let us know in the comments!