Maryland's Online Gambling Tax Proposal: A Collaborative Approach
Online gambling venues operating in Maryland will face a reduced tax rate for sports betting.
Let's dive into the latest happenings surrounding the proposed tax increase for online gambling in Maryland. After some heated debates, Governor Wes Moore and state lawmakers have reached an agreement on a more moderate rise in tax rates, rather than doubling the current rate as initially proposed.
During a session at the Ways and Means Committee of the House of Delegates, the amended proposal was put forward. The committee, after a close vote of 13-5, endorsed the updated version of House Bill 352. By raising the tax rate, the state's general fund will receive an influx of additional funds, supporting public services.
Balancing Policy and Operators' Interests
Governor Moore had initially advocated for a steeper tax hike, emphasizing the need for a tax structure that aligns with sound policies and those adopted by neighboring states with higher rates. However, the final decision took a more balanced approach, considering the potential economic impact on operators and competition in the industry.
Since the launch of Maryland's sports betting industry in late 2021, it has generated approximately $150 million for education under the current 15% tax rate. The reduced proposed increase will offer some relief to operators, enabling them to thrive while ensuring additional funds for state programs.
Lawmakers may have drawn inspiration from see-sawing situations in neighboring states. For instance, Illinois recently experienced concerns within the industry following a tax increase. Additionally, states such as Ohio and New Jersey are facing backlash over proposed tax hikes, impacting potential revenue generation.
Tax Rates for Online Casinos in Maryland
Currently, online casinos are not legal in Maryland, but a new bill (House Bill 17) proposes to introduce them, imposing a 15% tax rate on gross gaming revenue for public projects [2]. The tax rate for sports betting is set to increase from 15% to 20% from July 1, 2025 [1][3].
Compared to neighboring states like Delaware, which imposes a 25% tax rate on sports betting revenue and 43.85% on slots and 15.5% to 41.8% on table games [5], Maryland's proposed rates for online casinos are generally lower. Meanwhile, the 20% tax rate for sports betting still places Maryland behind some neighboring states, such as Pennsylvania, which levies a 36% tax on slot machine revenue and 16% on table games for land-based and online casinos, as well as a 36% tax rate on sports betting [4].
With the recent decision, Maryland aims to generate additional revenue from its thriving sports betting market without overburdening operators. The outcome demonstrates a joint effort to maintain a successful sports betting market while supporting public services.
- After facing opposition to a proposed doubling of the current tax rate for online gambling, Governor Wes Moore and state lawmakers in Maryland reached an agreement on a more moderate increase.
- The updated House Bill 352, which includes the revised tax increase, was endorsed by the Ways and Means Committee of the House of Delegates following deliberations.
- The proposed tax increase, although higher than the current 15% rate, aims to offer relief to Maryland operators compared to the tax rates in neighboring states such as Delaware and Pennsylvania.
- The decision to balance the tax rates is aimed at maximizing revenue for state programs while maintaining a successful sports betting market that attracts operators, as seen in the concerns faced by Illinois and potential backlash in Ohio and New Jersey over proposed tax hikes.
