Maryland Signs Sports Betting Tax Hike Into Law
Maryland’s Governor, Wes Moore, has officially enacted a significant update to the state’s sports betting tax structure, set to take effect in July 2025. This legislative move, encapsulated in the Budget Reconciliation and Financing Act of 2025 (HB352), raises the tax rate on sports betting from 15% to 20%.
Originally proposing a steeper 30% rate, Governor Moore negotiated with state lawmakers to reach the agreed-upon 20%. This adjustment reflects ongoing discussions regarding the balance between state revenue needs and the health of the local betting market.
The Importance of Sports Betting Revenue
Governor Moore has highlighted the burgeoning sports betting industry as a crucial financial resource to address a substantial $2.7 billion budget deficit. Of the revenue generated from sportsbooks, an impressive 95% will be funneled into public education initiatives through the Blueprint for Maryland’s Future Fund, while the remaining 5% will support the state’s General Fund.
Maryland has seen a notable surge in sports betting activity, evidenced by a staggering $5.9 billion in wagers for 2024, representing a 28.7% increase from the previous year. The state’s Gross Gaming Revenue (GGR) also expanded to $635.7 million—a remarkable year-over-year rise of 23.7%. Consequently, tax revenue climbed to $82.3 million, marking a 78% increase from 2023. With the impending tax adjustment, projections estimate an additional $32 million in revenue for the fiscal year 2026.
Concerns from Sportsbook Operators
The proposed tax hike has elicited significant concern from sportsbook operators. Governor Moore’s initial 30% tax has been criticized for its potential to stifle promotional efforts and push bettors toward unregulated offshore sportsbooks. Peter Jackson, CEO of Flutter, articulated these apprehensions, stating, “If you push taxes too high, then people will use illegal operators, and tax revenues will decline.”
In states where tax rates exceed 30%, companies like DraftKings have resorted to implementing a 3-4% surcharge on winning bets to alleviate the financial pressure. This situation adversely affects bettors in jurisdictions with elevated tax rates, including New York, Illinois, Pennsylvania, and Vermont.
Ohio’s recent experience illustrates the delicate balance between tax policy and revenue generation. The state doubled its tax rate from 10% to 20%, experiencing a 35.7% increase in tax revenue—rising from $133.3 million in 2023 to $180.8 million. However, despite a 15% increase in wagering handle (from $7.7 billion to $8.9 billion), operators reported a 4% decline in revenue, decreasing from $936.5 million to $899.4 million.
Furthermore, Ohio lawmakers are exploring additional taxation strategies, including a proposed tax on the betting handle itself, paving the way for new avenues of revenue. Tennessee maintains a comparatively low taxation rate of 1.85% on proceeds, but Ohio is on track to become the first state to tax both betting handle and revenue.
On the heels of this tax increase, the city of Baltimore is also pursuing legal action against major sportsbooks, FanDuel and DraftKings, regarding their marketing practices. The unfolding of these developments will be critical to observe, as they may impact Maryland’s impressive growth trajectory in sports betting over the past few years.
As the gambling landscape continues to evolve, stakeholder engagement and strategic policymaking will be vital in ensuring sustainable growth while effectively balancing state revenue requirements.
Adam Roarty brings significant expertise to this domain, having contributed his skills to industry-leading publications such as Oddschecker and Gambling Industry News. His extensive background in sports betting and online gambling fosters a comprehensive understanding of current trends and best practices.
