Maryland Governor Approves Tax Hike for Online Sportsbooks

The Free State joined some exclusive company this week.

Maryland Governor Wes Moore signed the state’s new budget into law this year. The budget included a 5% increase of the tax rate for online sports betting operators. His signature makes the state one of the few to successfully raise its rate, as others have seen their efforts defeated by strong opposition from the industry. 

The governor’s original budget proposal aimed to double the tax rate from 15% to 30%. Pushback from the industry led to many lawmakers rejecting the idea. The threat of fewer promotions and watered-down odds had them fearing that a steep hike would hurt Maryland’s thriving sports betting market over the long run.

The Maryland House amended the budget proposal to raise the rate to 20% instead of 30%. Lawmakers also rejected Moore’s proposal to use the additional sports betting revenue to address the state’s growing deficit. Instead, 95% of the tax revenue generated will go to Maryland schools, with the final 5% going into the general fund.

The tax increase will only apply to online operators, meaning the rate for retail operators will remain at 15%.

Louisiana Tries Similar Tactic 

Maryland’s successful tax increase is providing other states with a roadmap to achieve the same. With so many different markets failing to pass any tax hikes, lawmakers across the country are desperate for a solution.

Louisiana is one of the states who is attempting to follow Maryland’s lead. House Bill 639 proposed raising the state’s rate from 15% to 32.5%, but failed to gain momentum. However, a review version of the bill with a smaller increase to 21.5% was able to pass a floor vote.

If Louisiana can succeed, it could lead to smaller rate hike proposal popping up in markets across the country.