Maryland strikes agreement to augment gambling tax to 20%
Maryland Leads in Moderation with Online Sportsbook Tax Increase
Maryland is taking a balanced approach to its gambling industry. The state has been scrutinizing the sweepstakes social casinos, and even considered outlawing them, while also proposing an increase in the tax charged to online sportsbooks. However, a recent vote in the Maryland House of Delegates' Ways and Means Committee has shown a willingness to compromise, with the proposed tax increase on online sportsbooks dropping from 30% to 20%.
Maryland Taking a Halt on Steep Tax Hikes
In a 13-5 vote, House Bill 352, or the "Budget Reconciliation and Financing Act of 2025", was passed, aiming to raise the online sports betting tax to 20% instead of the originally proposed 30%. This more moderate increase is in response to concerns from the sector, which argued that excessive taxes could strain their ability to maintain their contributions to the state coffers and create a competitive market for players.
Remarkably, the tax on casino properties will not be affected, with the current 20% rate remaining unchanged. An earlier proposal to up this tax to 25% appears to have been abandoned altogether.
States Cautious about Over-Taxing the Gambling Industry
While recent legislative sessions have seen calls for gambling tax hikes, Maryland's approach serves as a model of pragmatism. Ohio, for instance, is considering raising its sportsbook tax rate from the current 20% to 40%. However, this proposal has met firm opposition from operators like BetMGM, DraftKings, Fanatics, and FanDuel, and their trade group, The Sports Betting Alliance.
As states crack down on illegal gambling, it's unlikely that customers will opt for the offshore market, despite slightly less attractive betting lines due to tax increases.
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Insights:
- Current and Proposed Tax Rates for Online Sportsbooks in Maryland:
- Current Tax Rate: The current tax rate on online sportsbooks in Maryland is 15%. This tax applies to major retail vendors as well as online sportsbooks, with the revenue going towards the Blueprint for Maryland’s Future Fund.
- Proposed Tax Rate: Starting July 1, 2025, Maryland will increase the tax rate on sports betting operators from 15% to 20%.
- Comparisons to Ohio:
- Ohio's Tax Rate: Ohio taxes sports betting operators at a rate of 10% on gross revenue. This rate is lower than both the current and proposed rates in Maryland.
- Maryland, in a decisive 13-5 vote, passed House Bill 352, also known as the "Budget Reconciliation and Financing Act of 2025," opting for a more moderate 20% tax increase on online sportsbooks, rather than the originally proposed 30%, demonstrating a cautious approach to taxing the gambling industry.
- Notably, the tax on casino properties in Maryland will remain unchanged at 20%, with an earlier proposal to up this tax to 25% having been abandoned.
- Maryland's approach stands in contrast to Ohio's, where a proposal to raise the sportsbook tax rate from 20% to 40% has faced strong opposition from operators like BetMGM, DraftKings, Fanatics, FanDuel, and their trade group, The Sports Betting Alliance.
- Despite slightly less attractive betting lines due to tax increases, it's unlikely that customers will opt for the offshore market because of states' crackdowns on illegal gambling.
- The tax revenue from online sportsbooks in Maryland goes towards the Blueprint for Maryland’s Future Fund.
- The gambling trends show a proven industry where finance and fintech sectors play significant roles, with casinos and sports betting continuing to evolve and grow in the years ahead, with casino-and-gambling-trends shaping the future of the industry.
