Lawmaker aims to raise sports betting tax rate in Massachusetts

Massachusetts Sports Betting Tax Revenue
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Massachusetts has emerged as the latest regulated gambling market in America to consider legislation that would increase the tax rate for sports betting operators.

Sen. John F. Keenan has proposed Amendment 828, a measure that aims to raise the tax rate for online sports betting operators in Massachusetts from 20% to 51%. The potential tax hike would give Massachusetts the highest tax rate in America matching New York’s.

Massachusetts also offers retail sports betting, which is taxed at a 15% rate.

If approved, Amendment 828 would change the Massachusetts Senate’s FY2025 budget plan, which is actively being discussed by state lawmakers. The plan projects tax revenue to reach $41.5 billion in 2025, a roughly $208 million decline from FY2024 estimates.

Massachusetts launched regulated sports wagering in 2023 and has since collected $127 million in tax revenue, according to data provided by the American Gaming Association.

Active gaming laws in Massachusetts require tax revenue from sports betting to be deposited into five separate funds with the state’s General Fund receiving the majority of proceeds. Since 2023, the fund has collected $57.2 million in tax revenue from wagering.

A potential tax increase for operators in Massachusetts adds to an already arduous regulatory process, which includes a $1 million annual licensing fee and an in-person vetting process. The state also requires operators to make a good-faith effort to provide advertising for the Massachusetts Lottery while ensuring age-appropriate logo displays.  

Massachusetts is also one of three states that prohibits credit card deposits for betting.

Tension in Massachusetts

Massachusetts is considering a tax rate increase amid animosity from operators toward the state’s gambling regulator. In March, the Massachusetts Gaming Commission (MGC) began discussing the potential implementation of sports wagering limits following a public comment in 2023 that questioned whether operators have the authority to limit bettors.

Earlier this week, the MGC held a roundtable discussion on the topic, which was only attended by one operator, Bally’s, despite a slew of invitations. The absence of other operators did not sit well with commissioners of the MGC who believed the discussion could have been more meaningful with the presence of the state’s licensed sportsbooks.

The MGC has yet to declare whether more informal discussions on the topic will be held.

Massachusetts joins other markets

The Bay State is considering a tax rate increase along with New Jersey and Illinois.

Earlier this month, Illinois Gov. J.B. Pritzker proposed in his FY2025 budget a plan to increase the sports betting tax rate in Illinois from 15% to 35% creating an additional $200 million in annual revenue. New Jersey Sen. John F. McKeon has introduced Senate No. 3064, which aims to increase the state’s sports betting tax rate on gross revenue to 30%.

McKeon’s measure also increases the tax rate for iGaming operators to 30%.