Wyoming Lawmakers Considering Tax Hike for Online Sportsbooks

Lawmakers in the Cowboy State are considering taking a big gamble with their small sports betting market.

Wyoming’s Select Committee on Capital Financing & Investments recommended doubling the tax rate for online sportsbook operators. The group heard from industry experts who pointed out that the country’s average tax rate was double the state’s 10%. With other states pushing their rates higher over the last year, Wyoming would soon fall further and further behind.

Committee head Tara Nethercott didn’t mince words when sharing the proposed hike. She believes the massive hike is justified, given the considerable autonomy operators are granted in the state. With the market exceeding all revenue expectations, she argues that the state has a right to a larger share of the profits.

Sports betting launched in Wyoming in September 2021. The industry has generated over $3.8 million in tax revenue. While that number is higher than many expected, it remains far below that of other states.

The proposed tax hike would also impact skill games found at local businesses, setting it far higher than most of the country.

Rate Hike Comes With Risks

The Sports Betting Alliance (SBA) did not waste time responding to the proposal. The group, whose members include the country’s top operators, warned that a tax hike would hurt bettors the most. 

“These types of changes also make legal sports betting products less able to compete against illegal and offshore sports betting operators that pay zero in taxes but are widely available online to bettors in Wyoming,” SBA Spokesman Nathan Clark said of the proposal.

Many states have defied SBA warnings to pass tax hikes, but the small Wyoming market might not have that luxury. Operators could choose to withdraw from the market, sending a message to state lawmakers across the country.

Sportsbooks could also respond to a tax hike by adding a surcharge on all bets, similar to those recently announced in Illinois. This would result in smaller winnings for bettors, potentially leading them to wager in other states or with offshore operators. 

Cheyenne, the state’s largest city and capital, sits just minutes away from the Colorado border, which has one of the most player-friendly markets in the US.