Massachusetts Senate turns down proposal to hike sports betting taxes

The Massachusetts Senate on Thursday rejected a proposal to increase the tax rate on online sports betting, maintaining the current 20% levy despite impassioned arguments for a hike from Democratic Sen. John Keenan.

Sen. Keenan proposed raising the tax on online sports betting revenue to 51%, which would have positioned Massachusetts as one of the most expensive states for sportsbook operators. Keenan framed his proposal as a necessary step to address public harm, particularly around mental health and the harassment of athletes.

"The public harm issues are going to get so far ahead of us unless we act," Keenan asserted during the Senate session. "We have an obligation to all the residents and taxpayers of the Commonwealth of Massachusetts to use whatever revenues we can from the industry to prevent the harms from happening."

However, Keenan’s amendment was swiftly rejected by the Senate, one of more than a thousand amendments proposed for the 2025 fiscal year budget bill. As a result, Massachusetts will continue to tax online sports betting at 20%, avoiding a significant hike similar to New York's rate.

Keenan's proposal is part of a broader national trend of states re-evaluating their financial arrangements with sportsbook operators following the legalization of sports betting. For instance, Ohio recently doubled its tax rate on sports betting operators to 20%, and lawmakers in Illinois, New Jersey, and Washington, D.C., are considering similar increases.

In Illinois, the proposed tax hike from 15% to 35% has met with opposition from the Sports Betting Alliance, which includes major operators like BetMGM, DraftKings, FanDuel, and Fanatics. These companies argue that higher taxes would force them to offer worse odds and fewer promotions, potentially driving bettors back to the illegal market.

Keenan's push for regulatory changes included calls for increased funding to support responsible gambling initiatives and a ban on player prop and in-game betting, which he described as highly addictive. He highlighted the absence of most sportsbook operators from a recent Massachusetts Gaming Commission roundtable on betting limits as evidence of the industry's disregard for regulatory efforts.

"Basically, they thumbed their nose at the gaming commission," Keenan remarked. "That's the industry that we're dealing with here in Massachusetts, an industry that is making far more money than they ever expected, and far more money than we expected them to make at this point."

Despite the rejection of his proposal, the pressure on sportsbook operators from potential tax increases continues to mount nationwide. Deutsche Bank analyst Carlo Santarelli has cited the "regulatory environment" as a significant concern for companies like DraftKings, warning that ignoring these tax rate increase proposals could prove shortsighted.