Available in nearly 40 US states, legal sports betting already reaches a large number of the country’s population. With regulation of the activity in the hands of lawmakers in different states, the tax rate is different from one jurisdiction to the other.
Massachusetts was among the states that legalized betting in 2022 but it wasn’t until last year when the activity launched. Although retail operators are subject to a 15% tax, online betting providers pay a 20% tax. A proposal filed by Sen. John F. Keenan sought to change the tax rate, increasing it from 20% to a whopping 51%, making Massachusetts the latest US state to go on a potential tax hike. Earlier this week, the proposal was shot down in the State Senate.
Besides Massachusetts, there are efforts toward raising the betting tax rate in Illinois and New Jersey. According to Keenan, the proposed tax rate increase under Amendment 828 with the state budget would help generate additional tax revenue that would benefit harm reduction and problem gambling treatment. During a discussion on the proposed change on Thursday, the Senator said that there aren’t legitimate reasons against the increase of the tax rate for sports wagering operators.
Per Keenan’s proposal an increase of 31% in the tax rate would be implemented, placing Massachusetts next to New York, which is the only other state with such a high tax rate. However, as noted, the Senator’s proposed amendment did not go through the Senate as it was rejected.
Earlier this month, the gambling regulator in Massachusetts, the Massachusetts Gaming Commission, confirmed it will review winning bettor restrictions. The gambling watchdog said that it will scrutinize activities that involve operators restricting bettor accounts not for losing but rather for consistent winning.
The Fight Against Betting Tax Increase in Illinois Continues
One of the vocal opponents of the betting tax hike in Illinois is the Sports Betting Alliance (SBA), a coalition of retail and online betting operators that advocate for safe and legal gambling entertainment. Major betting and gaming operators such as FanDuel, DraftKings and BetMGM support the alliance and its goals.
Amid the proposed tax rate increase in Illinois, the SBA has issued many warnings about the potential detrimental effect of such change. Among the biggest concerns surrounding the tax hike is that it may push bettors to the black market. “It’s clear—the unfair tax proposals will only send people back to the illegal market and ruin legal sports betting in Illinois,” wrote the SBA on X, formerly Twitter, earlier this week.
While the fight in Illinois continues, the tax hike in Massachusetts is on hold, at least for the moment.