Revamping Tax Policies: States with the Most Favorable Sports Betting Taxes
States with the Lowest Taxes on Sports Betting: Nevada Ties for Lowest Online Sports Betting Tax Rate in the US
A recent report has highlighted the varying tax rates on sports betting revenue across different states in the US. The emergence of sports betting, which was legalized by the Supreme Court in 2018, has led to significant differences in how state and local governments tax the revenue generated from this industry. The tax rates are determined by each state, and they can vary based on factors such as state regulations and market size.
According to the report, Nevada, Iowa, and Indiana are among the states with the lowest tax rates on online sports betting. Nevada has a tax rate of 6.75%, which is the same as Iowa, while Indiana has a slightly higher rate of 9.5%. These states authorized sports betting before 2020. Tennessee, on the other hand, has a low tax rate of 1.85%, but it is based on the betting handle rather than the revenue generated.
It is worth noting that tax rates can differ depending on whether the bets were placed online or at brick-and-mortar establishments. The tax rates mentioned in the report are specifically for online sports bets.
On the other hand, the report highlights that the Northeast region has imposed higher tax rates on sports betting revenue. For example, New York and New Hampshire have the highest tax rate of 51% for online sports betting revenue. New Hampshire, which only has one legal sportsbook operated by DraftKings, generated $69 million in online gross gaming revenue from July 2022 to June 2023, resulting in $31.7 million in tax revenue for the state.
As more states continue to legalize sports betting, tax rates will play a significant role in the regulation of this industry. It will be interesting to see how different states adjust their tax rates to attract bettors and generate revenue.
Below is a list of the top five states with the lowest taxes on sports betting:
#5 Michigan
– Online sports betting tax rate: 9.65%
– Legalization date: Dec. 20, 2019
– Tax allocation: School Aid Fund and $2 million annually goes to helping firefighters undergoing cancer treatments
#4 Indiana
– Online sports betting tax rate: 9.5%
– Legalization date: May 13, 2019
– Tax allocation: State general fund, with a set share going to fund solutions for problem gambling
#3 South Dakota
– Online sports betting tax rate: 9%
– Legalization date: March 18, 2021
– Tax allocation: Distributed across a variety of state initiatives, with a special emphasis on Lawrence County
#1 Iowa (tie)
– Online sports betting tax rate: 6.75%
– Legalization date: May 13, 2019
– Tax allocation: State general fund
#1 Nevada (tie)
– Online sports betting tax rate: 6.75%
– Legalization date: 1949
– Tax allocation: State general fund, with education and health services as key recipients
This report was originally published by AskGamblers in partnership with Stacker Studio.