Maryland Governor Wes Moore proposes doubling sports betting tax rate to 30%

Maryland Governor Wes Moore has proposed a bold move to double the state’s sports betting tax rate from 15% to 30%, a decision that could impact the burgeoning industry. Unveiled as part of his latest budget plan, the tax increase aims to bring Maryland in line with the higher rates of nearby states while generating additional revenue for state programs.

Helene Grady, Maryland’s budget and management secretary, stated that Maryland’s current tax rate is notably lower than those of neighboring jurisdictions. “Seems like a big jump, but many of our neighboring states are significantly higher than 15% today,” she said. Pennsylvania, for example, taxes sports betting operators at 36%, while New York’s rate exceeds 50%.

Since the state’s sports betting market launched in late 2021, operators have contributed around $128 million to education and problem gambling initiatives through the existing tax structure.

The proposed hike, if implemented, could more than double that figure, generating substantial revenue for the state. Under the new 30% rate, Maryland’s sports betting revenue since the program’s inception would have exceeded $256 million.

Governor Moore’s proposal is not without controversy. The sports betting industry is expected to oppose the measure, potentially ramping up lobbying efforts as seen in other states. For instance, DraftKings once floated the idea of a “gaming tax surcharge” for bettors in high-tax regions, though the concept was eventually dropped. Similar opposition could emerge in Maryland as operators push back against the increased tax burden.

The proposal will need approval from the state legislature, where lawmakers may amend or reject the measure. Maryland regulators are also exploring additional revenue-generating strategies, including eliminating promotional deductions for operators and targeting illegal offshore gambling activities.

The sports betting tax hike is one component of Governor Moore’s plan to address Maryland’s $3 billion deficit. Alongside the gambling industry changes, the budget proposal includes cuts to government spending and increased income taxes for high earners making over $500,000 annually.

Maryland is not the only state examining higher taxes on sports betting. Illinois and Ohio have recently raised their rates, with Ohio increasing its tax from 10% to 20% just seven months after launching its sports betting program. Other states, such as Massachusetts and New Jersey, have attempted similar measures but faced significant resistance.

If passed, Maryland’s new rate would be among the highest in the nation, trailing only New York, New Hampshire, Rhode Island, Pennsylvania, and Vermont. 

Maryland’s sports betting market has exceeded expectations since its launch, with revenues from the first five months of fiscal year 2024 alone surpassing $40 million.