Maryland raises online sports betting tax rate to 20% under new budget law

Online sports betting operators in Maryland are facing a higher tax burden following the enactment of the state’s new budget law. Governor Wes Moore signed the Budget Reconciliation and Financing Act of 2025, or House Bill 352, into law this week, raising the tax rate on mobile sportsbooks from 15% to 20%.

The increase is part of a broader fiscal package aimed at addressing a significant budget gap. Moore had initially proposed a 30% tax rate on mobile betting operators, calling it “sound tax policy” and arguing that it would align Maryland with rates in neighboring states.

However, lawmakers settled on a smaller increase after negotiations, with the House Ways and Means Committee approving the 20% rate in a 13-5 vote.

“This wasn’t just about balancing a budget,” Moore said in a statement after signing the bill. “It was about weathering two storms: A fiscal crisis and a new White House that attacks our economy.”

Under the new law, 5% of the tax revenue from mobile sports wagering will go into Maryland’s general fund. The remaining 95% will continue to support public education initiatives through the Blueprint for Maryland’s Future Fund. Since legal sports betting began in the state in December 2021, more than $160 million in tax revenue has been allocated to education.

While the tax rate for mobile sportsbooks is rising, the levy on in-person sports betting revenue remains unchanged at 15%.

The budget law does not authorize online casino gambling, despite separate proposals from lawmakers earlier this year. Bills introduced by Sen. Ron Watson and Del. Vanessa Atterbeary to legalize iGaming failed to advance in the legislature, with neither making it out of their originating chamber.

Some operators had already accounted for the anticipated tax increase in their 2025 financial projections. DraftKings, one of 11 licensed online sportsbooks in Maryland, cited the state’s tax hike as part of the reason it expects a $30 million revenue hit and a $26 million drop in adjusted EBITDA next year.

Maryland now joins a growing list of U.S. states increasing their tax take from legal wagering. Ohio, which raised its tax rate to 20% in 2023, is considering another hike, possibly up to 40%, and has proposed taxing total handle in addition to revenue.

In Louisiana, House Bill 639, aimed at supporting public university athletic departments, includes a tax change and is now pending in the Senate. New Jersey’s governor has proposed raising the state’s online betting and iGaming tax rates to 25%, while Illinois recently adopted a sliding tax scale ranging from 20% to 40% based on gross revenue.