Several states have recently announced plans to increase taxes on online sports betting, raising questions about whether Pennsylvania legislators will follow suit.
States such as New Jersey, Michigan, and Iowa have all implemented tax increases on online sports betting in an effort to generate more revenue for their respective state budgets. New Jersey, which already has a thriving online sports betting market, recently increased its tax rate on online sports betting from 8% to 15%, making it one of the highest rates in the country. Michigan and Iowa have also raised their tax rates on online sports betting, with Michigan increasing its rate from 8.4% to 20% and Iowa increasing its rate from 6.75% to 7.5%.
The decision to increase taxes on online sports betting comes as states continue to grapple with budget shortfalls caused by the COVID-19 pandemic. With many traditional revenue streams drying up due to the economic downturn, states are looking for new ways to generate income, and online sports betting has emerged as a lucrative opportunity.
In Pennsylvania, online sports betting has been a major source of revenue since it was legalized in 2018. The state has seen a steady increase in online sports betting revenue in recent years, with online sportsbooks generating over $700 million in revenue in 2020 alone. However, Pennsylvania currently has one of the lowest tax rates on online sports betting in the country, at just 36%.
Some lawmakers in Pennsylvania have called for an increase in the state’s online sports betting tax rate in order to generate more revenue for the state. State Senator Jay Costa has introduced legislation that would increase the tax rate on online sports betting to 43.5%, which would bring in an estimated $50 million in additional revenue for the state.
However, other lawmakers in Pennsylvania are hesitant to increase taxes on online sports betting, citing concerns that higher taxes could drive bettors to illegal, unregulated sportsbooks. State Representative Doug Mastriano has voiced his opposition to increasing taxes on online sports betting, arguing that it would be counterproductive and could harm the state’s growing sports betting industry.
As Pennsylvania lawmakers continue to debate the issue, the future of online sports betting taxes in the state remains uncertain. However, the recent trend of other states increasing taxes on online sports betting may put pressure on Pennsylvania legislators to follow suit in order to shore up the state’s budget and generate additional revenue. Only time will tell whether Pennsylvania will join the growing number of states that have chosen to increase taxes on online sports betting.
