Wyoming lawmakers propose doubling sports betting tax rate to 20%

A Wyoming legislative committee has proposed a sweeping increase in gambling taxes, including a plan to double the state’s sports betting tax rate from 10% to 20%, aligning it with the national average but drawing criticism from operators and industry groups.

The Select Committee on Capital Financing and Investments also recommended raising the tax on skill-based gaming from 20% to 25% and on historic horse racing from 1.5% to 2.5%. Committee Chair Sen. Tara Nethercott said the move is necessary to improve oversight and return more revenue to the state.

“I think the state of Wyoming has been quite generous to the players in this space, giving them almost exclusive access to the market, at a proliferated rate, having infiltrated every block of all our communities,” Nethercott said. “As the industry has grown exponentially in recent years, Wyoming needs to establish enhanced oversight and revenues to match the growing needs from impacts in our communities.”

Wyoming legalized online sports betting in 2021 and is currently one of 38 states with regulated wagering markets. Its relatively light tax burden — 10% on operator revenue — was initially designed to attract business in the nation’s least-populated state. The sports betting market, which comprises five licensed online sportsbooks and retail options, has generated $3.8 million in taxes on $69 million in revenue since launch.

While the proposed increase to 20% would place Wyoming in line with the U.S. average of 19%, the move has prompted concern from industry stakeholders.

The Sports Betting Alliance (SBA), which represents major national sportsbook brands, came out against the measure. Spokesman Nathan Clark warned of consumer impacts and increased competition from offshore platforms.

“Customers in states that have raised sports betting taxes wind up with a more costly sports betting experience — from worse promotions to decreased payouts,” Clark said. “These types of changes also make legal sports betting products less able to compete against illegal and offshore sports betting operators that pay zero in taxes but are widely available online to bettors in Wyoming.”

Skill-based machine operators have also protested the proposed tax hike on their sector, arguing that such a measure would harm small businesses.

“If the Wyoming Legislature passes this tax increase, it would make Wyoming’s tax rate (on these games) one of the highest in the country,” said Jonathan Downing, a representative of Cowboy Skill LLC, which operates skill-based machines across the state. Wyoming allows no more than four such machines per licensed location, a constraint critics say already limits revenue potential.

Other states have seen similar pushback to aggressive tax hikes. In Illinois, where lawmakers recently implemented a $0.25 to $0.50 per-bet surcharge and doubled the revenue tax to 40%, both FanDuel and DraftKings responded by adding a $0.50 betting fee to all wagers. The SBA criticized the Illinois model as “discriminatory, punitive, and constitutionally suspect.”

Still, the Wyoming committee’s plan includes efforts to improve accountability in the sector. Lawmakers are also considering the creation of a central integrity system to audit gaming machine revenues and strengthen oversight.

Sports betting operators in Wyoming pay $100,000 for an initial five-year license and $50,000 for renewals thereafter. While the market continues to grow — state data showed a 30% year-over-year increase in taxable revenue in April — lawmakers say the time has come to recalibrate the balance between access and accountability.