Comparing Sports Betting Taxes by State
Legal sports betting has taken the US by storm. For more than 25 years, the Professional and Amateur Sports Protection Act (PASPA) prohibited states from legalizing sports betting. With their destiny now in their hands, many jumped at the opportunity and the potential tax revenue the activity would generate.
As the national tally indicates, it’s “mission accomplished” regarding tax revenue, with legal sports betting generating over $2 billion in tax revenue since May 2018.
Below is a comprehensive look at sports betting taxes by state, including the retail and mobile sports betting tax rates.
| State | Retail Rate | Online Rate | Promo Deductions? |
| Arizona | 8% | 10% | Partial (being phased out) |
| Arkansas | 13% on first $150M; 20% above | N/A | No |
| Colorado | 10% | 10% | Partial (capped at 2%/month until July 2026) |
| Connecticut | 13.75% | 13.75% | Yes |
| Delaware | 50% | 50% | No |
| Florida | 13.75% | 10% | Yes |
| Illinois | 20-40% + $0.25-0.50/wager | 20-40% + $0.25-0.50/wager | No |
| Indiana | 9.5% | 9.5% | No |
| Iowa | 6.75% | 6.75% | Yes |
| Kansas | 10% | 10% | No |
| Kentucky | 9.75% | 14.25% | Yes |
| Louisiana | 10% | 21.5% | Partial |
| Maine | 10% | 10% (9.8% effective rate) | Yes |
| Maryland | 15% | 20% | Partial |
| Massachusetts | 15% | 20% | Yes |
| Michigan | 8.4% | 8.4% (5.1% effective rate) | Yes |
| Mississippi | 12% | N/A | No |
| Missouri | 10% | 10% | Yes |
| Montana | State keeps all proceeds | N/A | N/A |
| Nebraska | 20% | N/A | No |
| New Hampshire | 51% | 51% (45.2% effenctive rate) | No |
| New Jersey | 19.75% | 19.75% | Partial |
| New Mexico | No standard public rate | No standard public rate | N/A |
| New York | 10% | 51% | No |
| North Carolina | 18% | 18% | No |
| North Dakota | No standard public rate | N/A | N/A |
| Ohio | 20% | 20% | Partial (being phased out) |
| Oregon | State keeps 51% of proceeds | 51% | N/A |
| Pennsylvania | 36% | 36% (24.6% effective rate) | Yes |
| Rhode Island | 51% | 51% | No |
| South Dakota | 9% | N/A | No |
| Tennessee | N/A | 1.85% of handle | N/A |
| Vermont | N/A | 20% + revenue share (28.4% effective rate) | No |
| Virginia | 15% | 15% | Partial |
| Washington | No standard public rate | N/A | N/A |
| Washington DC | 10% | 20% for Type A; 30% for Type C | Yes |
| West Virginia | 10% | 10% | No |
| Wisconsin | No standard public rate | N/A | N/A |
| Wyoming | N/A | 10% (5.8% effective rate) | Yes |
Some states were more interested in tax revenue than others, evidenced by the significant differences in sports betting tax rates. As such, sports betting taxes vary by state.
Examining the states with mobile sports betting shows a wide gap in the marginal sports betting tax rate.
Marginal vs. Effective Tax Rates
Distinctions for promo deductions matter a lot in practice. There is a significant difference between the marginal tax rate and the effective tax rate in states that allow considerable deductions for promotional spending.
For example, because Michigan allows promotional deductions, the state has one of the lowest effective tax rates for sportsbooks. Conversely, because New York prohibits sportsbooks from deducting promotional wagers from gross gaming revenue, tax collections as a percentage of net gaming revenue can reach 81.6% at the 51% rate.
Phasing out promo deductions
Arizona, Colorado, Ohio, and Virginia are either partially or fully curbing promo deductions. Colorado is phasing them out entirely—limited to 2% per month from July 2025, dropping to 1% from January 2026, and disappearing completely by July 2026.
Sliding scale
Other jurisdictions, including Illinois, Tennessee, Vermont, and Washington, D.C., are opting for a graduated taxation scheme.
Illinois was already on a sliding scale, with a top-out of 40%. Then it became the first state to charge sportsbooks a flat rate per wager: $0.25 per bet on the first 20M wagers, $0.50 beyond that.
Tennessee is a unique outlier: it taxes at a 1.85% rate on each operator's total betting handle (making it the first and only state to tax on handle rather than revenue), with operators paying slightly less under this model than they would have under the former 20% revenue tax.
Where Does the Tax Revenue Go?
The usual landing spot is a state's general fund, which is effectively a slush fund that can go towards all different kinds of projects, but most states have earmarked sports betting revenue for specific purposes.
Here is a glimpse at what sports betting tax revenue funds.
Education
Education is the most common political justification for introducing taxes on sports betting. New York's 51% tax rate was explicitly designed to fund education, and the state consistently contributes over $1 billion annually to its Education Fund.
New Hampshire, Tennessee, and Maryland followed similar logic. When Maryland raised its online rate from 15% to 20% in 2025, 95% of the increased revenue was specifically earmarked for education.
Public Works and Infrastructure
This can include water projects, funding state pensions, infrastructure, and more. In Colorado, for example, sports betting revenue is allocated primarily to the Colorado Water Plan Implementation Cash Fund, which provides grants for water conservation projects.
Revenue is dedicated to the Kentucky Permanent Pension Fund, a direct response to the state's severe pension underfunding.
Problem Gambling Support
Nearly every state with legal betting allocates some portion of sports betting tax revenue for problem gambling treatment and helplines.
Sports Betting Tax FAQs
Which states have the highest sports betting tax rate?
New York, Rhode Island, New Hampshire, Oregon, and Delaware have the highest statutory tax rates in the country. Rhode Island (51%), New Hampshire (51%), Oregon (51%), and Delaware (50%) all follow a state-run lottery model, while New York has the highest online tax rate of any multi-operator market at 51%.
Which states have the most favorable sports betting tax rates?
Iowa and Nevada are tied for the lowest statutory tax rate in the country at 6.75%. However, several states end up with lower tax rates because they allow sportsbooks to deduct promotional spending. Those include Michigan (5.1%) and Wyoming (5.8%).
Do I need to pay taxes on my sports bets?
Yes, you will need to pay federal and state taxes on any sports betting winnings, though the rates differ from those listed on this page.
Gambling winnings are considered part of your yearly income. The federal tax rate for gambling winnings is 24%. The state tax rate varies by your location.
