Sports Betting Tax Rates — Map Details State-By-State Tax For Online, Retail Sportsbooks

The tax rates imposed by individual states on sports betting revenue are all over the map — pun definitely intended. But really, there is a lot of variance from one state to another on the rate levied by the state on revenue generated from that state’s licensed operators. This map showing the sports betting tax rates in each state is intended to display the range across the U.S., with additional information supplied where the rate on online sports betting differs from the rate for retail sports wagering (at brick-and-mortar facilities).

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The sports betting industry in the United States as we know it today began less than a decade ago, with the U.S. Supreme Court’s overturning of the Professional and Amateur Sports Protection Act (PASPA). Under the PASPA law that began in January 1993, states were not allowed to authorize sports betting, making it effectively illegal in the majority of U.S. states, exceptions being Nevada, Delaware, Montana, and Oregon, which had varying forms of sports betting “grandfathered” in at the time.

In May 2018, in the case of Murphy v. National Collegiate Athletic Association, the Supreme Court ruled PASPA unconstitutional on Tenth Amendment grounds, finding that Congress had violated “anti-commandeering” principles — basically, passing a law declaring that states themselves may not legislate in a certain area, in this case a popular form of gambling .

The case was brought to the court by New Jersey officials after a protracted legal battle dating back to 2008. The high court ruled in favor of New Jersey, overturning PASPA, now leaving sports betting — as well as the all-important tax rate on a sportsbook’s revenue — up to the states to regulate.

After the law fell, states quickly began to legalize sports betting, some of them even prior to May 2018 in anticipation of the law’s demise — all with various tax regulations — starting with Delaware, New Jersey, Rhode Island, Mississippi, West Virginia, New Mexico, and Arkansas that first year.

Today, 38 states, plus Washington, D.C. and Puerto Rico, allow regulated sports betting in some capacity, 28 of them authorizing online sports betting. Tax rates on gross sports betting revenue (GGR) range from 6.76% in Nevada to 51% in New York, New Hampshire, and Rhode Island. Several states have increased the rates that were applied at the time of legalization, including Illinois, Maryland, Ohio, and New Jersey. State legislatures have a tendency to view sports betting as a “vice” and thus the rate a “sin tax” that they have been willing to ratchet up in order to patch holes in the state’s budget. Industry stakeholders, of course, have pushed back against the increases and proposed increases.

Some states — Arizona, Connecticut, Louisiana, Pennsylvania, Rhode Island — put 100% of the tax revenue generated from sports betting into the state’s general state fund. Many states allocate a percentage of the money toward gambling addiction resources, or put it back into the gambling industry. Some states fund specific programs or initiatives.

In addition, states such as Washington, New Mexico, North Dakota, and Wisconsin only allow on-reservation tribal sports betting, so they do not have a statewide tax rate for operators. In New Hampshire and Oregon, DraftKings is the sole sportsbook supplier through the state’s lottery, making it an effective monopoly.