In 2026, the U.S. federal government will cut funding to states, and many states plan to fill budget gaps by increasing sports betting taxes or introducing new forms of gambling. However, industry insiders warn that excessively high tax rates may impact the legal gambling industry, leading to less revenue than expected. Details on U.S. sports betting tax policies can be found on the PASA official website.
Tax Increase Motivation: Federal Cuts and Budget Pressure
The budget pressure on states is significant! Affected by federal funding cuts, Louisiana, Maryland, and New Jersey have already raised sports betting taxes in 2025. Louisiana increased the tax rate from 15% to 21.5%, with an initial proposal to raise it to 50% abandoned due to concerns about operators exiting the market. The Governor of Ohio proposed doubling the tax rate from 20% to 40%, while Michigan and Ohio directly rejected the tax increase proposals. Industry experts predict that states with low tax rates such as Kansas and Iowa may become focal areas for tax increase proposals in 2026.
Industry Impact: High Tax Rates Trigger Chain Reactions
Too high a tax rate can be counterproductive! Illinois has raised taxes continuously in recent years, changing the fixed tax rate of 15% to a progressive tax rate of 20%-40% in 2024, and adding a per-bet fee in 2025, resulting in a 15% decrease in betting volume in September 2025 compared to the previous year. Operators pass on costs to players by charging betting fees or raising minimum bet amounts, and the state's fiscal revenue in September was only $740,000 more than the same period last year, with minimal increase in revenue. Additionally, the legal industry also faces competition from illegal markets and federal regulatory market predictions.
Path to Balance: Regulation and Legislation Must Consider the Long Term
We can't just focus on short-term budget filling! Christopher Herbert, Chairman of the Louisiana Gaming Control Board, emphasizes that excessively high tax rates make it unprofitable for operators, ultimately leading to industry contraction. Illinois legislator Jehan Gordon-Booth urges lawmakers to balance industry development with budget needs, avoiding continuous damage to the industry's foundation. Regulatory bodies should also play a professional role, educating legislators about the disadvantages of high tax rates and promoting policies that consider long-term development rather than solely pursuing short-term financial filling.
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This article is from "PASA-Global iGaming Leader" gambling industry news channel:https://t.me/pasa_news
Original in-depth gambling channel:https://t.me/gamblingdeep
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PASA official website: https://www.pasa.news
