Attempt to Grow Massachusetts Online Sportsbook Tax Fails
Massachusetts lawmakers rejected a proposal to increase the state's tax rate on online sports betting income earned by bookmakers in the commonwealth.
State Senator John Keenan (D-Plymouth) suggested hiking the tax from the current 20% to 51%. He wanted to add this regulatory amendment to the 2025 budget bill that was being discussed in the chamber.
Keenan believed that the state needs more revenue from gambling to combat the negative consequences of mobile betting as the industry evolves and expands. He stated, "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 these harms from happening."
However, Keenan's colleagues expressed their disagreement. After mentioning the higher sports betting tax, the chamber voted down the proposal and continued their review of the budget bill.
Online Sports Betting Business
In-person sports betting became legal at Massachusetts' three casinos on January 31, 2023, and online sportsbooks started operating on March 10, 2023. Since then, the state has collected $93.9 million in taxes and assessments from licensed sports wagering operators.
45% of the sports betting tax goes to the General Fund, 17.5% to the Workplace Investment Trust Fund, and 27.5% to the Gaming Local Aid Fund.
9% of the sports betting tax is directed to the Public Health Trust Fund, established for the research, prevention, and treatment of problem gambling. This fund has received approximately $8.44 million since the legalization of sports betting.
The remaining 1% of the sports betting tax is allocated to the Youth Development and Achievement Fund.
In contrast, Massachusetts' retail sportsbooks at Encore Boston Harbor, MGM Springfield, and Plainridge Park have a lower tax rate of 15%.
Ex-Massachusetts Governor Charlie Baker (R), now the head of the NCAA, had signed the sports betting bill in August 2022. In his new position, he's advocated for states with legal sports betting to ban bets involving individual college student-athletes. Such wagers are already prohibited in Massachusetts.
Raising Taxes
Although Keenan championed raising the state's tax rate on online sportsbook operators in the Massachusetts State House, he's not alone in states with legal online sports gambling.
Lawmakers in Ohio raised the state's tax on online sports betting revenue from 10% to 20% in 2023. Proposals to raise the tax for internet sports books are being considered in Illinois, New Jersey, and Washington, DC.
A recent analysis by financial services site LendingTree revealed that legal sports betting in the 38 states and the District of Columbia generated tax revenue of approximately $2.5 billion last year.
New York gained the most from its online and retail sportsbooks, collecting approximately $876 million in tax revenue. New York taxes online sportsbook income at 51%, as Keenan had proposed in nearby Massachusetts.
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Source: www.casino.org
