Bid to Increase Betting Taxes Laws & Regulations

Massachusetts Legislative Efforts to Increase Sports Betting Taxes Fail

By Lisa Spencer Senior Editor Updated: 10 June 2024

Lisa Spencer Senior Editor

As a Senior Editor at Betting.US, Lisa Spencer is a valuable member of our expert team. With a Master’s degree in Applied Mathematics, Lisa is adept in gambling theory and analyzing odds. She contributes by writing online sportsbook reviews and finding competitive markets to help our readers make an informed choice.

See Full Bio

Recent legislative efforts in Massachusetts aimed at significantly hiking the state’s tax rate on gross revenue earned by online sportsbooks have fallen short. State Senator John Keenan proposed an increase in the tax on online sports betting, taking it from the current rate of 20 percent to 51 percent.

Keenan said that this regulatory amendment could be added to the state’s 2025 budget bill, which was under consideration by the chamber. He justified his proposal by talking about the need for increased revenue from gambling to address the various problems and issues that have arisen from the expansion of the mobile betting industry in the state. He said:

The public harm issues are going to get so far ahead of us unless we act. We have an obligation to all the residents and taxpayers of the Commonwealth of Massachusetts to use whatever revenues we can from the industry to prevent the harms from happening.

However, following Keenan’s proposition regarding the sports betting tax hike, the chamber voted against the proposal and proceeded with the review of the budget bill.

Sports Betting Brings in Significant Revenue for the State

Since the start of legal, in-person sports betting at Massachusetts’ three casinos on January 31, 2023, and the subsequent launch of online sportsbooks on March 10, 2023, the state has made nearly $93.9 million in taxes and assessments from licensed sports wagering operators throughout 2023.

The taxes levied on sports betting are allocated to various services. 45 percent is allocated to the General Fund, 17.5 percent to the Workplace Investment Trust Fund, and 27.5 percent to the Gaming Local Aid Fund.

In addition to this, 9 percent of the sports betting tax contributes to Massachusetts’ Public Health Trust Fund, which supports research, prevention, and treatment efforts related to problem gambling. The remaining 1 percent of the tax is designated for the Youth Development and Achievement Fund.

The state’s retail sportsbooks, which are at Encore Boston Harbor, MGM Springfield, and Plainridge Park, are subject to a lower tax rate of 15 percent.

The sports betting bill in Massachusetts was signed into law by former Governor Charlie Baker in August 2022. Baker now serves as the head of the NCAA. In his current role, Baker has advocated for states permitting sports betting to prohibit bets involving the performance of individual college student-athletes, a prohibition already in place in Massachusetts.

Other States Looking at Similar Increases

While Senator Keenan’s proposal for a tax increase on mobile sportsbook operators in Massachusetts faced resistance in the State House, similar efforts have been seen in other states that allow online sports gambling.

In Ohio, lawmakers raised the tax on online sports betting revenue from 10 percent to 20 percent in 2023. Also, proposals to increase tax rates for online sportsbooks have been or are being looked at in states like Illinois, New Jersey, and Washington, DC.

An analysis was carried out by financial services website LendingTree, and this showed that legal sports betting across 38 states and the District of Columbia generated tax revenue of close to $2.5 billion last year. New York led the way in tax revenue generation, collecting around $876 million from online and retail sportsbooks, with a tax rate of 51 percent.