Maryland Sports Betting Tax Hike Proposal Scaled Back in House

An effort to double Maryland’s sports betting operator tax rate has failed, but a smaller hike remains in play.

The House Ways and Means Committee adjusted the budget proposal during a meeting last Wednesday. Instead of doubling the rate to 30%, it is now set at 20%. Lawmakers now have until April 7 to approve Governor Wes Moore's budget proposal.

While the committee didn’t approve the proposed hike, it was made to give it the best chance of passing. The state is looking for revenue to help offset a growing deficit, and sports betting has become the top choice. Committee members had that in mind when amending the budget proposal but believed doubling the rate would cause too much pushback from the industry.

A smaller hike will be easier for the state’s sportsbooks to accept and will significantly boost tax revenue. Several House lawmakers feared that doubling the rate would lead to operators recouping the lost revenue by offering less valuable bonuses, promotions, and odds.

A bill to raise the tax rate to 25% was rejected last week, meaning the proposed 20% is unlikely to increase.

Can Maryland Succeed Where Others Have Failed?

Many states have attempted to raise their sports betting tax rates over the last year, but few have succeeded. A flurry of them looked to push their rate significantly higher but could not overcome opposition from the industry.

The biggest hurdle to raising tax rates is public support. Sportsbooks have a history of aggressive ad campaigns to wear off fewer bonuses and watered-down odds to offset the lost revenue. This creates a market where bettors spend more to win less, leading to many opposing hikes.

Many past attempts to raise operator tax rates have involved large-scale hikes. Maryland hopes that a more manageable one could pass without a costly response from the industry.