.svg)
Democratic Governor Wes Moore released his budget proposal for fiscal year 2026 on Wednesday (January 15), calling on lawmakers to double the sports-betting tax rate and implement a more modest increase to the taxes paid by casinos on their table games.
Moore characterized the tax reforms proposed as part of his executive budget proposal as an effort to make the Maryland tax code “simpler, fairer, and pro-growth.”
However, the state faces a $2.7bn budget deficit for fiscal year 2026, its largest in 20 years, and the governor has turned to the state's gambling industry to help plug the hole.
Moore’s budget proposal would increase the sports-betting tax rate from 15 percent to 30 percent, which would raise a projected $95.4m in additional tax revenue. The accompanying proposal to increase taxes on table games from 20 percent to 25 percent of revenue would also raise $31.3m in fiscal year 2026.
Overall, Moore’s budget proposal seeks to raise $987m in additional revenue, with the $126.7m in additional gaming taxes the second biggest contributor behind changes to personal and corporate tax rates.
The governor’s budget proposal will now go through the legislative process and will need to be approved by the House of Delegates and Senate, before being enacted prior to the start of the new fiscal year on July 1.
Helene Grady, Maryland's Secretary of Budget and Management, told reporters at a news conference in Annapolis that the proposed increase in the sports-betting tax rate from 15 to 30 percent “seems like a big jump, but many of our neighboring states are significantly higher than 15 percent today”.
Grady noted that Pennsylvania taxes sports-betting revenue at a headline rate of 36 percent, while New York's rate is even higher at 51 percent. Other neighboring states including Virginia and West Virginia are more aligned with Maryland's existing tax rate, although some operators in Washington, D.C. are now taxed at 30 percent.
Currently, Maryland has 11 mobile and 13 retail sportsbooks.
The proposed tax increase comes after Maryland's 11 mobile sports-betting platforms and 13 retail sportsbooks reported total gross revenue of more than $635m in 2024, with taxes owed after promotional deductions topping $60m in December, with $6.51m in taxes paid to the state.
John Martin, director of the Maryland Lottery and Gaming Control Agency, said FanDuel and DraftKings easily account for 75 to 80 percent of the state’s mobile sports-betting market.
“We are at the midpoint of fiscal 2025 and our contributions stand at over $46.5m,” Martin said during a briefing Wednesday before the Maryland House of Delegates' Ways and Means Committee.
“So, we are clearly on pace to exceed the previous fiscal year contribution,” Martin said. “We should see some significant growth in the months ahead, as we continue with the conclusion of the professional football season and into college basketball season.”
Should Moore’s gaming tax increases be approved by the legislature, Maryland would become the third state to raise its tax rate on sports betting in recent months.
Ohio raised its rate from 10 percent to 20 percent in July 2023, while Illinois moved to a graduated tax rate of 20 percent to 40 percent from 15 percent in July 2024. In both instances, the tax increases were also first proposed by the state governor as part of an annual budget package.
Besides a potential tax increase, Maryland gaming regulators are separately considering a proposal introduced in September to eliminate promotional deductions for mobile sports-betting operators.
“This is another example of going to the golden goose in hopes to get a few more eggs out of an already disastrous tax structure,” said Brendan Bussmann, managing partner with B Global in Las Vegas, in response to Governor Moore's announcement.
“Maryland was already the bad example of gaming tax policy and the doubling of sports betting along with the 25 percent increase in table games is plain and simply too much.”
Bussmann said the governor's proposal is likely a starting point for a conversation, “but these increases in states with significant budget deficits are likely not the first nor the last we will see this year”.
“It shows that the industry needs to continue to show the pressures that taxes play on the product and how it cannot be the panacea for these gaps,” Bussmann added.
Barry Jonas, an analyst with Truist Securities, said that although there is a recent trend toward tax increases for sports betting, the proposed tax increase on table games was a surprise.
“On the land-based side, we were not expecting this, with MGM National Harbor bearing the brunt of impact,” Jonas wrote in a research report. “The greater risk, of course, is more states follow suit and explore higher gaming taxes.”
Assuming implementation, Jonas estimated the incremental impact to DraftKings’s 2025 estimated EBITDA could be in the range of $13m to $15m and $25m to $30m on a full-year basis, with FanDuel in the range of $25m and $50m on a full-year basis.
DraftKings paid $24m in taxes last year at the 15 percent rate, with FanDuel paying $45m. Jonas noted that BetMGM paid $6m in taxes to Maryland in 2024 and assumed a second half of 2025 impact of $3m to $4m, with a $6m to $8m impact on a full-year basis.
Penn Entertainment paid $2m in taxes last year and would be affected in the second half of 2025 by $1m, and $2m on a full-year basis.
“Additionally, we reiterate the gross impact could be mitigated by a reduction in promos and other measures,” Jonas wrote. Jonas estimated that the additional 5 percent tax increase on table games could cost MGM $16m, with smaller impacts of less than $1m for Penn Entertainment and Churchill Downs.
