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The Massachusetts Senate on Thursday dismissed a proposal to increase the tax rate on online sports betting, opting to maintain the current 20% levy. Democratic Sen. John Keenan advocated for a significant hike, proposing a 51% tax rate on online sports betting revenue. This change would have made Massachusetts one of the most expensive states for sportsbook operators.
Sen. Keenan presented his proposal as essential for addressing public harm, particularly in areas like mental health and athlete harassment. “The public harm issues are going to get so far ahead of us unless we act,” Keenan asserted during the Senate session. “We have an obligation to all the residents and taxpayers of the Commonwealth of Massachusetts to use whatever revenues we can from the industry to prevent the harms from happening.”
Despite his impassioned plea, the Senate swiftly rejected Keenan’s amendment. This proposal was one of over a thousand amendments considered for the 2025 fiscal year budget bill. Consequently, Massachusetts will continue taxing online sports betting at 20%, avoiding a steep hike similar to New York’s 51% rate.
Keenan’s proposal reflects a broader national trend where states are reassessing their financial arrangements with sportsbook operators post-legalization of sports betting. Recently, Ohio doubled its tax rate on sports betting operators to 20%. Meanwhile, lawmakers in Illinois, New Jersey, and Washington, D.C., are considering similar increases.
In Illinois, a proposed tax hike from 15% to 35% has met with opposition from the Sports Betting Alliance, which includes major operators like BetMGM, DraftKings, FanDuel, and Fanatics. These companies argue that higher taxes would force them to offer worse odds and fewer promotions, potentially driving bettors back to the illegal market.
Keenan’s push for regulatory changes also included calls for increased funding for responsible gambling initiatives and a ban on player prop and in-game betting, which he described as highly addictive. He criticized the absence of most sportsbook operators from a recent Massachusetts Gaming Commission roundtable on betting limits, viewing it as a sign of the industry’s disregard for regulatory efforts. “Basically, they thumbed their nose at the gaming commission,” Keenan remarked. “That’s the industry that we’re dealing with here in Massachusetts, an industry that is making far more money than they ever expected, and far more money than we expected them to make at this point.”
Despite the rejection of his proposal, the pressure on sportsbook operators from potential tax increases continues to mount nationwide. Deutsche Bank analyst Carlo Santarelli has identified the “regulatory environment” as a significant concern for companies like DraftKings, warning that ignoring these tax rate increase proposals could prove shortsighted.