Governor Wes Moore had initially proposed a steeper increase to 30% in an effort to align Maryland with neighbouring states and to reinforce the state’s fiscal outlook.
Maryland has approved a rise in the tax rate for online sportsbook operators from 15% to 20%, as part of the state’s 2025 Budget Reconciliation and Financing Act.
Governor Wes Moore had initially proposed a steeper increase to 30% in an effort to align Maryland with neighbouring states and to reinforce the state’s fiscal outlook. However, lawmakers opted for a more measured approach, settling on a 20% rate to strike a balance between revenue generation and maintaining a competitive market for operators.
The revised rate places Maryland in line with other states such as Ohio and Illinois, both of which tax mobile sports betting at 20%.
The additional revenue is earmarked to help address Maryland’s financial pressures and to bolster vital public services, particularly education. A key change under the new legislation is the allocation of 5% of all mobile sports betting revenue to the state’s general fund. The remaining proceeds, including those from in-person betting, will continue to support the Blueprint for Maryland’s Future Fund, the state’s flagship education reform initiative, which has already received over $160 million since December 2021.
The 15% tax rate for retail sportsbooks will remain unchanged.
Governor Moore described the rise as essential for “maintaining the state’s financial health,” pointing to a persistent structural deficit and a slow-moving economy. The administration said the move was in response to both state-level budget issues and the broader economic effects of federal policy changes.
Maryland is not alone in rethinking how it taxes sports betting. In 2025, states including North Carolina, Louisiana, and Ohio have either introduced or are considering similar hikes. Colorado, meanwhile, will ban the deduction of promotional bets from taxable income from July 2025.
Sportsbook operators have been bracing for changes. DraftKings recently warned that upcoming tax and regulatory adjustments across several states, including Maryland, could trim $30 million from its 2025 revenue.
Maryland’s decision highlights a wider trend, as more states look to the lucrative online betting sector to plug budget gaps and finance essential services. While operators may feel the pinch, they are also expected to adjust their business models in response.