Maryland Increases Tax Rate for Online Sports Betting Operations
Maryland recently announced changes to its taxation of online sportsbooks, effective July 1, 2025. The tax rate on online sports betting revenue will increase from 15% to 20%, marking a significant shift in the state's approach to gambling taxes [1][2][3].
The decision comes as part of Maryland's broader efforts to address a $2.7 billion budget deficit. Initially, Governor Wes Moore proposed doubling the rate to 30%, but a compromise was reached, resulting in a 20% tax rate following a 13-5 vote in the House Ways and Means Committee [1][2].
**Revenue Distribution:**
The tax revenue from retail sports betting will continue to be directed to the Blueprint for Maryland’s Future Fund, which supports public education, with no changes to the 15% tax rate [1]. In contrast, online sports betting will now be taxed at 20%, with 95% of the online tax revenue flowing into the Blueprint for Maryland’s Future Fund, and the remaining 5% going to the state's general fund [1].
**A Trend Among U.S. States:**
Maryland's move makes it the first state in 2025 to confirm a sports betting tax hike, signaling a trend among U.S. states to adjust gambling taxes to boost state revenues, particularly for education [1][2]. Other states, such as Illinois and Louisiana, have also implemented new or increased taxes and fees on sports betting this year [2][3]. However, Maryland stands out for explicitly tying the lion's share of online sports betting tax revenue to public education funding [2][3].
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These changes are expected to generate additional funding for Maryland's public schools while providing a sustainable model for balancing the state's budget [1][2]. The decision not to raise the rate as high as initially proposed reflects a carefully negotiated compromise with legislators [1].
[1] Maryland Matters [2] Baltimore Sun [3] Washington Post [4] Forbes [5] Gambling.com [6] The Spruce [7] Casinos.com
- The increase in the tax rate on online sports betting revenue from 15% to 20% in Maryland, effective July 1, 2025, follows the state's efforts to boost revenues for its $2.7 billion budget deficit.
- Unlike retail sports betting, online sports betting in Maryland will now be taxed at 20%, with 95% of the tax revenue flowing into the Blueprint for Maryland’s Future Fund, which primarily supports public education.
- Maryland's move to raise the tax rate on online sports betting coincides with a trend among U.S. states, signifying an adjustment in gambling taxes to generate additional revenues, particularly for education, such as the recent implementation of new or increased taxes and fees on sports betting in Illinois and Louisiana.
