John Keenan, a Massachusetts Senator, recently proposed a state budget amendment that would raise the state’s online sports betting tax rate from 20% to 51%.

Keenan’s proposal, one of hundreds of proposed budget amendments, would lead to a massive shift in the state’s current sports betting market. Massachusetts’ tax rate would match New York’s sports betting tax rate of 51%, if the idea gains approval. The 51% tax rate in New York is the highest of any U.S. state.

The proposed tax boost only adds to possible tensions between Massachusetts regulators and lawmakers with the state’s betting operators. Earlier this week, operators skipped a roundtable discussion held by the Massachusetts Gaming Commission about limiting sports betting, angering commissioners.

The budget amendment proposal, if adopted, would surely irk Massachusetts sports betting operators even more. It’s possible some operators would consider leaving the state, given such a dramatic shift in the financial feasibility of operating.

Becoming a trend

Massachusetts legislators aren’t the first lawmakers to ponder an increase to their state’s respective sports betting tax rate.

Ohio doubled its sports betting tax rate from 10% to 20% last year, a move that irritated some operators. The state didn’t wait long before making a major shift to its sports wagering market, as legal sports betting went live in Ohio at the start of 2023.

New Jersey and Illinois each have proposals in place to raise their respective sports betting tax rates.

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A bill in New Jersey aims to raise the state’s online sports betting tax from 13% to 30%. In Illinois, the Governor’s budget proposal would raise the sports betting tax rate from 15% to 35%, in a move that received major pushback from the Sports Betting Alliance – a group consisting of BetMGM, DraftKings, Fanatics Sportsbook, and FanDuel.

The SBA devotes an entire page of its website to arguing against the Illinois proposal, and the page prompts bettors to reach out to their state representatives to speak against the tax increase. The SBA argues a major tax hike would lead to worse odds and fewer promotions for the state’s sports bettors.

While it’s unclear if any of the three states will successfully move forward with tax increases, it’s clear legislators are showing a growing interest in boosting their state’s potential sports betting tax revenue gains.

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