U.S. States Eye Sports Betting Tax Hikes Amid Budget Gaps and Revenue Needs

In an era of budget tightening and fiscal strain, five U.S. states are considering substantial increases in taxes on sports betting as a means to bolster public finances.

North Carolina, Maryland, Louisiana, Ohio, and New Jersey are each advancing proposals to hike levies on sportsbooks, triggering sharp debate between lawmakers and industry stakeholders concerned about market disruption.

North Carolina: A Bold Move to Double Taxes

Leading the pack is North Carolina, where Senate Bill 257 proposes doubling the current sports betting tax rate from 18% to 36%, effective October 1, 2025. The move is embedded in a sweeping $65 billion budget and has already passed the state Senate, now awaiting a House vote.

According to state officials, the projected increase in tax revenue would be channeled toward funding the University of North Carolina system and youth sports programs. The state’s sports betting market has shown robust early performance. For example, FanDuel alone reported $799 million in revenue, from which it paid $143.7 million in taxes by March 2024.

Yet, operators caution that higher rates may backfire. “There’s a risk that steep taxes could push consumers toward illegal betting platforms,” warned a FanDuel spokesperson. The concern is that over-taxation may impair the legal market’s competitiveness and undermine responsible gambling frameworks.

Maryland: Compromise After Pushback

In Maryland, lawmakers enacted House Bill 352, raising the tax on mobile sports betting from 15% to 20%. The move came as a watered-down version of Governor Wes Moore’s original proposal, which sought a much steeper increase to 30%, aimed at closing a $3 billion budget deficit.

While operators voiced concerns, lawmakers ultimately struck a middle ground. Industry insiders acknowledged that a 20% rate was more manageable, though still a challenge in a competitive regional market.

Louisiana: Industry Pressure Lowers Ambition

Louisiana’s House Bill 639 originally sought to push the online sports betting tax to 32.5%, but after fierce industry backlash, the proposed rate was revised downward to 21.5%. Lawmakers are keen to secure additional revenue but are treading carefully to avoid destabilizing the market.

The bill is currently under legislative review, with state officials arguing that the measure balances fiscal responsibility with commercial sustainability.

Ohio: A Mix of Rejection and Recalibration

In Ohio, a proposal to double the sports betting tax to 40% was rejected in April 2025. However, Senate Bill 199 has introduced a new concept: a 2% tax on all bets placed, layered on top of the existing 20% operator tax. This approach shifts part of the tax burden directly onto the betting handle, not just operator profits.

The bill is under debate, with some lawmakers defending it as a fairer distribution of tax responsibility, while opponents argue it could discourage bettors and reduce total wagering volume.

New Jersey: Pushback Against Doubling Taxes

Meanwhile, New Jersey is facing fierce resistance to a proposal that would nearly double the current tax on both sports betting and online casino revenues from 13% to 25%. The measure is part of a broader $58.1 billion budget plan aimed at meeting growing public expenditure demands.

However, critics warn the tax hike could undermine New Jersey’s position as a national leader in online gambling, a sector that has helped revitalize Atlantic City and generated hundreds of millions in state revenue. Operators and analysts alike caution that such a move could erode market share and stifle further investment.

Online Casinos: A Missed Opportunity or Next Frontier?

While tax increases dominate current discussions, some legislators are also floating the idea of legalizing online casinos in more states to unlock new revenue streams. As of June 2025, only seven U.S. states have legalized online casino gaming, leaving room for expansion amid growing state fiscal challenges.

As the debate unfolds, industry experts and government officials alike are grappling with the balance between revenue generation and market viability. With economic pressures mounting, the sports betting sector finds itself once again in the crosshairs of state fiscal policy — and the stakes, both political and economic, are higher than ever. 

By fLEXI tEAM