Establishing a new source of tax revenues to boost state coffers is a well-worn argument from lawmakers in favor of legalizing sports betting or otherwise expanding gambling. As we saw in 2025, once sports betting or iGaming is up and running, many states soon want more.
Over the past 12 months, we’ve seen a flurry of activity as governors look to close budget shortfalls and lawmakers decide that the lucrative activity of online gambling could stand to be even more profitable for the government. Here’s a recap of the states that squeezed more juice from the lemon in 2025.
Maryland moves first
The year began with several state proposals to tax online sports betting more heavily, and Maryland was the first to officially pass such a rise.
Gov. Wes Moore signed HB 352 into law in May to raise the levy from 15% to 20%. Things could have been worse for the state’s operators; that was a small increase but a big compromise. Moore’s original proposal suggested a new rate of 32% and he also wanted to bump the casino table games tax rate from 20% to 25%, but that was scratched from the final budget.
Louisiana lifts levy
Louisiana was close behind, implementing a slightly larger increase from 15% to 21.5% a month after Maryland moved. As with Moore, Louisiana Gov. Jeff Landry was talked down after pushing for one of the biggest proportionate increases in recent memory. Landry wanted to more than double what online sportsbooks pay, initially putting forth a 32% target, but the rate was altered late in the House discussion.
While most states that increase sports betting taxes dedicate the extra money to existing initiatives, Louisiana created a new fund to put a chunk of the revenue towards NCAA Division I college athletics programs, particularly focused on supporting scholarships, insurance and medical coverage and facility upgrades. Landry’s signature made Louisiana the first state to use tax proceeds from sports wagering to support college sports.
New Jersey hits both verticals
While the Maryland governor’s attempt to increase taxes on both online sports betting and iGaming was talked down in the legislature, New Jersey went ahead and did it. Gov. Phil Murphy approved increasing both the online casino rate of 15% and the online sports wagering levy of 13% to 19.75%.
Like other states, New Jersey aimed for more but settled for less. Murphy’s budget proposal initially intended to raise the rates for both verticals to 25% of adjusted revenues. Murphy’s original proposal was projected to generate more than $400 million in additional state revenue but was fiercely opposed by both the Sports Betting Alliance (SBA) and the Casino Association of New Jersey.
Illinois rewrites playbook
Not content with last year’s switch from a 15% adjusted gross revenue tax to a sliding scale that goes all the way up to 40%, Illinois outdid itself in 2025 by becoming the first state to start charging sportsbooks a flat rate on each individual wager they take.
Perhaps the most controversial tax move since the repeal of PASPA, Illinois’ decision to make sportsbooks pay either 25 or 50 cents per bet sparked direct responses from all 10 licensed sportsbooks. Half of them, mostly the biggest hitters, added in-state customer surcharges and the other five either added or raised minimum bet amounts.
The results so far have been notable. In the first three months of its existence, the per-bet tax earned Illinois more than $21 million in extra tax revenue, nearly $16.5 million of which came from FanDuel and DraftKings. Meanwhile, in September, the first month with that duo’s retaliatory surcharges in effect, the total number of sports bets placed in Illinois fell by more than five million year over year. Remember that Cook County, which includes Chicago, also taxes sports bets in its jurisdiction at 2% of AGR, and Chicago’s mayor wants to pile on a 10.25% city tax. Illinois is awfully expensive these days.
The change to Chicago city taxes could be the straw that breaks the camel’s back, as SBA members have threatened to potentially leave the city on Jan. 1 if there aren’t changes to the proposed budget.
Ohio flirts with another hike
Ohio Gov. Mike DeWine was ultimately unsuccessful (for now) in trying to increase sports taxes again, with his proposal to double the 20% rate to 40% hitting roadblocks in the legislature. But, like Illinois with its groundbreaking per-wager charge, the Buckeye State is another that is thinking outside the box.
As well as that proposed revenue tax increase, Sen. Louis Blessing filed legislation that would have made Ohio the first state to tax both online sportsbooks’ revenue and their handle. Blessing’s SB 199, which didn’t get far but could return for discussion in 2026, would add a 2% handle tax for both online and brick-and-mortar sports wagering. SBC Americas took a stab at assessing the potential impacts such a handle levy would have on operators.
Pennsylvania pending?
Other states that also raised the idea of raising sports betting taxes in 2025 included a Wyoming idea and North Carolina suggesting doubling its 18% rate just over a year after its market opened. Meanwhile, an early-year Mississippi bill mooted increasing taxes on land-based casinos in an attempt to help offset lost revenues from illegal sports betting.
And, while official legislation never materialized, there were plenty of whispers around Pennsylvania. The SBC has been running a campaign for months urging Pennsylvania residents to oppose a potential tax hike. PA already charges its sportsbooks 36%, below only Illinois’ top bracket of 40% and New York’s 51% in multi-operator markets.
