States Wrestle Sports Betting Taxes Amid Surging Revenues

• States are cashing in on record revenue but asking whether the public is getting shortchanged from sports betting taxes.
• Tax policy debates from Ohio to Louisiana are exposing fault lines between industry profits and public benefit.
• Lawmakers nationwide are rethinking the deals that brought sportsbooks into their states in the first place.

DENVER – As legal sports betting continues to expand and mature across the United States, lawmakers are facing growing pressure to reassess how the industry is taxed. From Ohio to Louisiana, Colorado to North Carolina, debates over how to structure sports betting taxes are revealing deeper questions about fairness, public benefit, and regulatory responsibility.

At the heart of the issue is a common theme: states are seeing record-breaking betting handle and revenue, but the public return (particularly in funding for addiction services, education, or infrastructure) remains in flux.

In response, legislatures are rethinking the terms under which many legal sports betting sites initially entered the market.

Ohio Sports Betting

In Ohio, tensions boiled over after senators proposed slashing the tax rate on certain sports betting operators from 20% to 10%. The move was met with fierce criticism from local media, especially as it clashed with Governor Mike DeWine’s call to double the tax to help fund youth and professional sports infrastructure.

Critics argue that Ohio sportsbooks, many of which operate exclusively online and are based out of state, contribute little to Ohio’s economy. With this, the proposed tax break would be a giveaway to an industry that already profits handsomely without investing in the communities it serves.

Louisiana Sports Betting

Louisiana, by contrast, is pushing in the opposite direction. Lawmakers advanced a bill to more than double the sports betting tax rate from 15% to 32.5%, aligning it with the rate on video poker.

The additional revenue would partially fund college athletics through a new SPORT fund, benefiting Division I programs across the state. The bill also dedicates funds to addiction treatment and inclusive education programs.

While Louisiana sportsbooks voiced opposition, citing the already above-average rate, legislators emphasized that many of these companies lack physical infrastructure or employment presence in Louisiana, unlike local casinos that face much steeper obligations.

North Carolina Sports Betting

Exceeding expectations with over $130 million in tax revenue in its first year, North Carolina sportsbooks are now seeing a proposed 36% tax hike.

Companies warned legislators that higher rates could mean fewer sports betting bonuses and worse odds for consumers. Lawmakers, however, appear skeptical of those claims.

As in other states with legal sports betting, the debate hinges on whether the promises of economic harm from operators are genuine, or merely pressure tactics.

Colorado Sports Betting

Meanwhile, Colorado took a different route. Rather than changing its 10% tax rate, the state passed legislation to eliminate the long-standing deduction for promotional bets. With this, it effectively raises taxable revenue.

Lawmakers estimate the change will generate an additional $12 million annually for water conservation projects, which is the primary beneficiary of Colorado sports betting tax revenue under 2019’s Proposition DD.

Officials noted that the original rationale for the promo bet deduction—to help companies establish market share—is no longer valid in an already thriving marketplace.

Across these diverse state-level approaches, a shared narrative is emerging: the sports betting industry, once welcomed with light regulation and competitive tax rates to spur adoption, is now being held to account.

Lawmakers are increasingly focused on ensuring the public derives meaningful benefits from the amount of money bet on sports in the US, which surpassed $500 billion since 2018. That includes channeling revenue toward public goods, holding operators accountable for social harms, and aligning tax rates with other gambling sectors.

With more states considering adjustments in 2025 and beyond, the sports betting tax debate is no longer just a budget issue but a broader referendum on the role of gambling in the public sphere.

Next Read: U.S. Sports Betting Handle Surpasses Half a Trillion Dollars

News tags: Colorado | Louisiana | Mike DeWine | North Carolina | Ohio | SPORT fund