The Taxman Cometh
Less than a month into 2025, we already have three states proposing sports betting tax rate increases (with more to come).
The Bulletin Board
THE LEDE: A bad trend for the industry: Massachusetts, Indiana, and Maryland consider increasing sports betting tax rates.
WEEKEND ROUNDUP: DraftKings facing several lawsuits; ESPN’s new RG Ads; NGCB is down two commissioners.
NEWS: Legal updates on skill games from PA, KS, NC, and VA.
VIEWS: Ontario’s iGaming revenue numbers make a good case for… Poker?
AROUND the WATERCOOLER: Explain it (sweepstakes) to me like I’m five.
STRAY THOUGHTS: Kindred spirits.
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Sporttrade is now live in their fifth state; Virginia
The Lede: 3 States Consider Sports Betting Tax Increases
Tax rates are among the most heavily debated policies whenever a state explores legalizing online gambling. Unsurprisingly, sports betting tax rates vary widely between states, ranging from 6.75% to 51%.
But now there is a growing concern, as states are “altering the terms of the deal” after both parties have signed on the dotted line. This is a troubling trend, as tax rates of this sort only move in one direction and can catch operators off guard.
Thus far, only two states have raised their sports betting tax rates post-launch:
Ohio: Doubled its tax rate from 10% to 20% in 2023.
Illinois: Shifted from a flat 15% rate to a tiered tax rate of 25-40% in 2024.
However, four other states — Louisiana, Colorado, Maryland, and Virginia — have reduced the promotional spend operators can deduct from their tax obligations.
And then there is Tennessee, which shifted from a 20% tax on revenue to a 1.85% tax on handle in 2023. That has led to higher overall tax collections, but monthly results are mixed due to the volatility of sports betting revenue results.
Plenty of others have also taken a look at increasing tax rates.
Massachusetts, New Jersey, Louisiana, and Michigan flirted with raising their sports betting tax rates in 2024, and three states have already proposed raising taxes in 2025:
Indiana: Indiana State Sen. Fady Qaddoura introduced a bill, SB 394, which would raise the tax on sports betting operators from 9.5% to 11%.
Maryland: Maryland is another state considering increasing its sports betting tax rate. Under Gov. Wes Moore’s budget proposal, the rate would increase from 15% to 30%.
Massachusetts: Under a broader reform bill, SD 1657, sponsored by State Sen. John Keenan, the sports betting tax rate would jump from 20% to 51%.
Several more bills will likely be introduced, and some other candidates are listed here.
While these proposals may or may not pass, they can also influence current efforts in not-yet-legal states. If the trend is higher tax rates in existing states, the policy debate will trickle into pending states.
Weekend Roundup: DraftKings Lawsuits; ESPN’s New RG Ads; NGCB Down Two Commissioners
DraftKings hit with another class action lawsuit: According to SBC Americas’ Jessica Welman, DraftKings is now dealing with seven advertising-related lawsuits. The latest was filed in the “US District Court for the Eastern District of New York, where Clara De Leon and Eric W. Mirsberger Jr. assert that the Boston-based operator has been “deceiving New Yorkers and misleading them” into betting larger sums and more frequently.” According to SBC Americas, the lawsuit also alleges DraftKings limits savvy bettors and deliberately targets players it should know are experiencing harm.
ESPN launches a new RG campaign with network personalities: ESPN has announced a new responsible gambling campaign featuring Elle Duncan and Gary Striewski. “At ESPN, we believe it’s our responsibility to help sports fans understand the risks of sports betting and learn what smart betting looks like,” said Kevin Martinez, Vice President of ESPN Corporate Citizenship. The ads will be in the old-school Sports Center vein, combining humor with the overarching message. The first spot, dubbed “Wedding Day,” features Elle Duncan.
NGCB has lost two of its three commissioners in 2025: Nevada Gaming Control Board Chair Kirk Hendrick has announced he will step down from his position following the 2025 legislative session. Hendrick is the second commissioner to leave the NGCB in 2025; Commissioner Brittnie Watkins said she would not seek reelection for another term — her term ends at the end of the month. Richard Schuetz, who has heavily critiqued Nevada regulators, tweeted, “Two of the three members of the Nevada Gaming Control Board have resigned. This follows a lot of bad publicity related to MGM and Resorts World brought on by federal investigations. This type of thing brings about federal oversight. Nevada has to up its game.”
Kero Sports lands partnership with Caesars, taking over from Simplebet: Kero Sports has “announced a partnership with Caesars Entertainment to further enhance its live sports betting markets on the Caesars Sportsbook app,” per a press release. Recall that DraftKings acquired Simplebet in August, creating a microbetting vacuum for other operators like Caesars. Tomash Devenishek, CEO of Kero, said, “We are extremely proud to partner with an iconic brand like Caesars. Our team has worked relentlessly to incorporate the learnings of the last few years in the international arena not simply to ensure that we have the content our partners desire but to ensure that this content delivers across the metrics of profitability, engagement and retention.”
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News: Opinions Vary on the Legality of Skill Games
The legal battles over retail skill games are a significant story that I’ve been neglecting of late because other news has taken precedence. Still, while scanning my bookmarks and seeing about a dozen stories on the topic, I can’t ignore it any longer.
Let’s see if I can summarize the latest updates from several states (which is a precursor to what the online sweepstakes battle will likely look like).
North Carolina (negative): The North Carolina Court of Appeals, in a split decision in December, “sided with law enforcement’s efforts to close a gaming business that operated video sweepstakes kiosks in Robeson County,” calling the machines games of chance.
Kansas (negative): In a fight that has dragged on for five years, the Kansas Supreme Court “upheld a district court’s dismissal of claims by POM of Kansas, a subsidiary of game manufacturer Pace-O-Matic of Duluth, Georgia, in a lawsuit seeking declaratory judgment that the state’s casino law didn’t apply to the company’s arcade game.”
Virginia Part 1 (positive): A bill that would legalize and regulate skill games is still alive in the legislature after advancing out of a subcommittee. “The proposal would establish taxes and penalties for skill game machines in the commonwealth,” per the Virginia Scope.
Virginia Part 2 (neutral to negative): Virginia Gov. Glenn Youngkin, who vetoed a skill games bill last year, has said he’s “not interested in progressing any of those kinds of bills,” but he’s also signaled his support for a regulatory body to oversee all forms of gambling in the state. “Let’s work together on other issues where we can find common ground. One of those issues is gaming," said Youngkin. "We must take action to enable the creation of the Virginia Gaming Commission to consolidate the regulatory oversight of our vast gaming ecosystem under one entity.
Pennsylvania (positive): With lawmakers set to introduce legislation to legalize and regulate skill games, the pro-regulation side has picked up a powerful ally. According to Play Pennsylvania, “One lawmaker even says she’s heard from Governor Josh Shapiro that he would like to see the games regulated.”
Views: What Can Ontario’s iGaming Numbers Tell Us?
As Gaming News Canada reports, iGaming Ontario has not only added monthly revenue reports (in addition to its previous quarterly reports) this month but has also released monthly data reports for each month since the market launched, providing a clearer year-over-year look at the market.
The overall breakdown of the market is of particular interest. It highlights the opportunities states that offer mobile sports betting but do not offer online casinos are passing on.
According to GNC, online casinos have accounted for 73% of all online revenue in Ontario since launch. Sports betting accounted for 24%, and poker accounted for just 2.5%.
GNC also notes that the split is becoming more online casino-heavy over time, with online casinos accounting for 75% of revenue in 2024.
The US is a different market and will likely be more balanced between casinos and sports (55-60% casino and 35-40% sports). But what really caught my attention is poker’s 2.5% share. That’s a pretty solid result in a market of just 15.8 million people.
If online poker were widely available in the US (say, 200 million residents), and if those markets pool players (a trend that is gaining momentum), I can see poker’s share of the US revenue pie reaching 5% or more. Poker is ingrained in American culture, and the bigger the player pool, the more appealing it is. As I’ve argued in the past, there is a case to be made for poker-only legislation:
There are three underlying reasons to legalize online poker:
To protect consumers. Online poker is readily available whether it’s regulated or unregulated.
To generate tax revenue. Online poker can generate direct and indirect revenue for the state and the economy.
To support existing gambling in the state. Online poker is additive to existing land-based and online gambling products.
It’s still not the massive opportunity that online casinos offer, but it is an opportunity. Based on Ontario’s $155 million haul since April 2022, a US market of 200 million that doubled Ontario’s performance would have generated about $2 billion in revenue over 33 months (about $60 million per month).
Maybe there is money in poker, after all? And if online casino continues to be a slow slog, poker-only bills could begin to emerge.
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Around the Watercooler
Social media conversations, rumors, and gossip.
I bookmarked this tweet earlier this month, and I think it sums up many people’s thoughts on this:
I talked about this in Friday’s feature column, noting:
“I can’t imagine the licensed operators will just throw their hands in the air and tell sweepstakes companies, prediction markets, and whatever else is coming down the road, “Good for you! You outsmarted and outmaneuvered us.”
“What should operators who have jumped through every hoop to get a license in New Jersey, Pennsylvania, Michigan, or any state that has legalized and regulated online casinos or sports betting do? Just deal with it?
“If that’s the case, why not just relinquish your licenses? Why burden yourself with the financial and regulatory restraints of legal, regulated gambling licenses if anyone can launch an unregulated site that looks and acts like a gambling site?
“Why waste your time and money trying to legalize mobile sports betting in California, Texas, Florida, and elsewhere?”
Stray Thoughts
The following is an excerpt from the book I am currently reading, Sengoku Jidai: Nobunaga, Hideyoshi, and Ieyasu: Three Unifiers of Japan, by Danny Chaplin.
“On another occasion, when offered the present of a dusky ouzel [better known as a Thrush], a species of songbird, Takechiyo [later to become Tokugawa Ieyasu] declined the gift offering as his reason that these birds were unoriginal since they imitated the songs of other species. ‘It is the same principle with people’, he explained, ‘we value them because of their originality. However, those who are able to successfully imitate others we do not value, and consequently, they are not suitable companions for a great leader.’”
Let’s just say there are too many dusky ouzels inhabiting the gambling space and not enough Tokugawa Ieyasus who see through the charade. The industry is stuck in a cycle of imitation, where innovation is stifled by a focus on replicating successful but unoriginal strategies.
Or, as George S. Patton said, “If everyone is thinking alike, then someone isn't thinking.”
Ieyasu and Patton were clearly kindred spirits.