Gambling Winning Tax Rates Per State

Modified by Sean Johnson on March 03, 2021 in Industry News

The introduction of online casinos and gaming has seen a shift in the actions of different states and jurisdictions. They're all trying to regulate and approve, and in turn profit from, this new surge in online betting that has seenmillions of people register on a variety of online casinos and try their luck.

As of now, only three states regulate online bets being placed on slots, poker, and table games. These include Delaware, Pennsylvania, and New Jersey. The tax rates per state vary greatly, with some states like New Jersey having 15%, while Delaware has a 62.5% tax rate for online casinos. Pennsylvania has the most specific tax rates, with online slots having a 54% tax rate and online poker and table games having a 16% tax rate.

STATE

TAX RATES

Delaware

62.5 % (50% + 12.5%)

New Jersey

15%

Pennsylvania

54% slots, 16% poker and table games

Online Sportsbook Tax Rates

A total of nine states across the country legally have access to online sportsbook betting. These include Nevada, New Jersey, New Hampshire, Indiana, Pennsylvania, Rhode Island, Iowa, West Virginia, and Oregon. The tax rates vary massively across all nine of these legal states.

Nevada and Iowa have the lowest tax rates out of these states, employing a rate of only 6.75% from the total sportsbook winnings. Going to the other end of the spectrum, Rhode Island takes away a large chunk of 83% by adding the 51% revenue sharing amount and 32% from the state's vendor. Right behind Rhode Island is Delaware, coming in second and charging a significant 62.5% tax rate.

STATES WITH ONLINE SPORTSBOOK

TAX RATE

Nevada

6.75%

Iowa

6.75%

Indiana

9.5%

West Virginia

10%

New Jersey

13% (casino-based) 14.25% (racetrack-based)

Pennsylvania

36%

New Hampshire

51% (revenue share)

Delaware

62.5% *

Rhode Island

83% **

Oregon

Not disclosed

 * Includes a 12.5% share to the state vendor and a 50% revenue share with the state.
** Includes a 32% share to the state vendor, along with a 51% revenue share with the state.

The American Gaming Association believes that illegal gambling operations prosper because the tax rates being set too high fosters competition in the market. This makes it easier for illegal gambling operations to function by offering lower tax rates. The American Gaming Association is trying to take appropriate steps to track the tax rates across the country.

With the recent rise in online gambling and the specific increase in competition between the northeast and mid-Atlantic gambling markets, high taxation has proven to be a bit of a problem, causing many unconventional issues. High tax rates discourage investors and business people, resulting in less online gambling operations being set up and less market growth for the gambling industry in general.

The Impact of High Online Tax Rates

When discussing the impact of high online tax rates, Pennsylvania comes up most of the time, with its staggering tax rate of 54% on slots. It is also partially considered to be the reason why the state only has five online slot operators, even though it is one of the most populated states in America and has a population of approximately 13 million.

Despite drawbacks like these, there is still a little ray of hope. Currently, Pennsylvania only houses eight online sportsbooks. Still, there are expected to be many more launched in the near future, with many factors working in favor of the PA sports betting market.

The executive director of the International Centre for Gaming (ICG) at the University of Nevada Las Vegas, Joe Bertolone, has admitted that online growth will continue to fuel and lead to expansion and different innovations, even in high tax jurisdictions like Pennsylvania. In fact, he says that because the niche is so unique and hot, the chances for expansion in a state like PA are even greater, primarily because of the massive population of the state, which is close to 13 million. Tapping into a state with such a large population is bound to reap significant rewards, and that is exactly what everyone is after.

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