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September 16.2025
2 Minutes Read

Understanding Online Sports Betting Taxes by State for 2025

Map of online sports betting taxes by state in 2025

Exploring the Landscape of Online Sports Betting Taxes in 2025

Since the 2018 Murphy v. NCAA decision changed the course of sports betting in the United States, legal wagering has expanded rapidly across many states. Currently, sports betting is legalized in about 40 states and the District of Columbia. With this growth, the structure and rate of taxation have become vital considerations for lawmakers and bettors alike.

The Tax Rates: A Closer Look

As states regulate and tax sports betting, there is notable variance in how they do so. Some states, like New Hampshire and New York, impose hefty taxes on sports betting revenue, approaching rates as high as 51%. Conversely, Nevada and Iowa maintain more modest tax rates of 6.75%. This discrepancy can significantly affect the profitability of sportsbooks and, subsequently, the revenues states receive.

Understanding Tax Structures

Most states apply an ad valorem tax on the gross gaming revenues (GGR) of sportsbook operators, measured before any operational expenses are deducted. Recently, states have been examining the impact of promotional wagers on GGR, which has sparked discussions about fair taxation practices. Unique tax structures have emerged in states like Tennessee, which taxes the total amount wagered, rather than the revenue generated.

The Monopoly of Sports Betting

Oregon has taken a unique approach by granting DraftKings a monopoly on online sports betting within the state. In return, the state collects a significant percentage of sports betting proceeds, highlighting how states are navigating both taxation and the regulation of betting markets. As states work to balance profitability with ethical considerations, it remains to be seen how these practices will evolve in future legislative sessions.

The Implications for Bettors and States

The complex landscape of online sports betting taxes presents both opportunities and challenges for states and consumers. As markets continue to develop, understanding how taxes work will be crucial for bettors, particularly in states where tax rates influence overall gambling experiences. Engaging with this evolving framework may lead to more informed betting decisions and a better grasp of how tax dollars are allocated for community needs.

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