An Odds Boost (On Taxes)
Buyer beware. Ohio doubled its sports betting tax rate last year, and two more states, Illinois and New Jersey are considering revising their gambling laws to increase the tax rate.
The Bulletin Board
NEWS: Another state, New Jersey, considers raising the tax rate on online gambling operators.
NEWS: Online casino legalization is a heavy lift following multiple scandals involving the gambling industry and Indiana lawmakers.
NEWS: California tribes target 2026 for retail sports betting and 2028 for mobile.
QUICK HITTER: PA Gov. is aware of and monitoring a bill that would bring interstate online poker to the state.
AROUND the WATERCOOLER: A recently launched gambling news site and Substack to keep an eye on.
STRAY THOUGHTS: Andrew Huberman looks the part.
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States to Sportsbooks: I’m Altering the Deal; Pray I Don’t Alter it Any Further
In a recent newsletter, I noted that sports betting tax rates have begun to tick up, with a mild warning that “this is something to keep an eye on as states’ raison d'être to legalize online gambling swings more and more towards the financial.”
Perhaps more worrisome (if you’re an online gambling operator) is the emerging trend of states increasing the tax rate ex post facto. In the words of Lando Calrissian, “This deal’s getting worse all the time.”
Ohio was the first state to adjust its sports betting tax rate upwards (from 10% to 20%) after the industry launched.
Illinois Gov. J.B. Pritzker proposed increasing the sports betting tax rate from 15% to 35%.
New Jersey is considering a similar policy change (h/t Legal Sports Report). A new bill, S 3064, would jump the state’s online gambling tax rate to 30%—the current rates are 14.25% for online sports betting and 15% for online casino games.
We are also seeing ungodly tax rates proposed on online casino games, like the 55% tax rate on non-live-dealer games in Maryland.
The industry may have shot itself in the foot on this one.
The industry approached state legislatures with dreams of riches but also with warnings. It argued that states would be wise to set modest tax rates on the low-hold industry to maximize revenue and pull customers away from offshore sites.
Operators once pointed to Nevada’s 5% historical hold rate as the expectation, but in state after state, the hold rates are creeping into the double digits.
States are also seeing the tax revenue generated in high-tax states and having some buyer’s remorse.
Indiana Scandals Derail Online Gambling Efforts
Efforts to bring online gambling to Indiana have been derailed by two high-publicity bribery scandals and more “dubious interactions” swirling under the surface.
“It [the scandals] taints the Statehouse,” Senate President Rodric Bray said in November 2023. “It diminishes the confidence that people have in the integrity of the Statehouse. It causes an awful lot of problems, and, it makes it particularly difficult to engage in that kind of policy.”
Former Rep. Sean Eberhart recently pled guilty to conspiracy to commit honest services fraud. Eberhart was accused of pushing for the relocation of two casinos owned by Spectacle Gaming in exchange for a $350,000 post-legislative career job.
Last year, former Sen. Brent Waltz and former Rep. John Keeler were sentenced to prison for election finance schemes by New Centaur - Spectacle’s original name.
According to the Indiana Capital Chronicle, “There are additional records of other dubious industry-lawmaker interactions, according to a list from the Indianapolis Star.”
With that as the backdrop, is it any wonder there are calls to revamp the state’s lobbying laws?
“We need some sort of (review) process. I hate to be the person who says, ‘I hope this scandal blows up into the biggest thing ever,’ but that’s what spurs reform,” Julia Vaughn, leader of government watchdog Common Cause Indiana, said.
Casino Association President and CEO Matt Bell told the Capital Chronicle that the issues involved a single company and didn’t go unpunished. Per Bell, the goal should be to “rebuild any trust that needs to be rebuilt with the Legislature and that we present ourselves as the great world-class businesses that we are.”
Any expansions, like online casinos, will have to wait until that trust is rebuilt, which won’t happen overnight. Indiana has gone from the best candidate to “should it even be included on a candidate list?”
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Is Sports Betting Coming to California?
When Victor Rocha talks about California gaming, you should listen. Speaking with Compliance+More, Rocha, the conference chair of the Indian Gaming Association, publisher of Pechanga.net, and member of the Pechanga Band of Luiseno Indians, provided the closest thing we have to a timeline for sports betting in California.
According to Rocha, tribes are planning another retail sports betting effort in 2026, with mobile betting to follow in 2028, assuming everything goes according to plan.
“The tribes that matter, the politically active ones who have put money into this, are united on that approach,” Rocha told C+M.
Still, a lot could change in two years, never mind four. Commercial operators have been on an apology tour following their failed attempt to bring mobile betting to California in 2022. My question is, will they acquiesce completely and let California tribes take the wheel? Or will they try to reinsert their influence back into the conversation?
Commercial operators could sit on the sidelines in 2026 and let California legalize retail betting. However, when online betting returns to the table in 2028, commercial operators will likely want to have a significant say in the process. It’s hard to imagine them biding their time for six years (from 2022) just to be relegated to the role of tech provider (as C+M put it) in the biggest sports betting market in the US.
There is also the possibility that tribes will have zero use for commercial operators by 2028, given the SCOTUS case involving the Seminole Tribe in Florida and the recently amended Department of Interior rules (which is a much bigger story than people realize).
Of course, as Rocha told C+M, “The tribes can wait longer than that.” As we saw in 2022, tribes are more than happy with the status quo.
Would they like to add sports betting? Of course. But only if it’s on their terms, which is their prerogative in California, where they are entitled to exclusivity and already feel cardrooms have taken away from them.
Quick Hitter: PA Gov. Has Eye on Interstate Online Poker
The Pennsylvania legislature is considering a bill, HB 2078, that requires the Pennsylvania Gaming Control Board to request to join the Multi-State Internet Gaming Agreement (MSIGA) within 30 days of its passage.
PokerFuse, the first to report on the story, contacted Gov. Josh Shapiro’s office for comment. A spokesperson responded that the Governor’s office is aware of the bill and is monitoring its progress. “At the moment, we will continue to review the proposal as it moves through the legislative process,” the spokesperson said.
As previously noted, Shapiro could bring Pennsylvania into the MSIGA with a pen stroke.
PokerFuse has also started the hashtag #GrowPApoker. The grassroots advocacy campaign calls on supporters to email, write, post on social media, or otherwise communicate their support of interstate online poker in Pennsylvania with House Majority Leader Matthew Bradford, Gov. Josh Shapiro, and their local representatives.
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Around the Watercooler
Social media conversations, rumors, and gossip.
My friends over at LotteryGeeks.com have launched another project, CasinoReports.com.
In addition to an in-house team that includes Eric Raskin and Brett Smiley, you’ll find articles by industry veteran Richard Schuetz and yours truly, who will be contributing the occasional column to the site.
The site is in its infancy, but the content is already top-notch.
Side note: Brett is this week’s guest on the Talking Shop Podcast, which is available to paid subscribers today and to all on Saturday.
Another newly launched project is the Gambling Files Substack, one of my favorite industry podcasts to listen to and be a guest on. The boys, Fintan Costello and Jon Bruford, will send an executive summary of the week’s podcast episodes as a substack newsletter.
You can subscribe here:
Stray Thoughts
Apropos of the whole Andrew Huberman cover story in New York Magazine, there are far too many well-spoken experts with silver bullets running around on YouTube and elsewhere.
I know who he is, but I don’t know much about Huberman, as I’ve only seen short clips. He certainly looks and sounds like someone worth listening to. Still, as I said in a previous newsletter:
“The older I get, the more I come to realize that many people we classify as experts or great thinkers are simply silver-tongued. They’re articulate and persuasive. They’re practiced public speakers who are good at reading a room, telling a joke, and holding you in suspense.
“This isn’t to say they are charlatans or don’t know what they’re talking about. Still, it would be wise to set their reputation aside and consider what they’re saying rather than how well they are saying it.”
Yes, Heuberman looks the part, but I would say this about anyone: double and triple-check what they’re saying selling before you believe the hype. Realize that any sentence that starts with “studies show” is often a still-unproven theory, sometimes meaningless, and more than occasionally, flat-out wrong.
From my personal experience, what was the “correct” diet or way to weight train/do cardio has gone through a dozen iterations, and the diets and training methods that are currently touted as “correct” won’t be “correct” in 10 years.