Massachusetts sports betting launched in early-2023 to great fanfare. A year later, though, lawmakers are now considering a significant change to the industry’s financial framework.
An amendment has been introduced that would more than double the Massachusetts sports betting tax rate for online operators. A figure that now stands at 20% could soon move to 51%, which would tie New York for the highest tax rate in the country.
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More on the proposed 51% tax rate
The amendment is authored by Sen. John Keenan, a Democrat representing Norfolk and Plymouth (south of Boston). He voted in favor of launching Massachusetts sports betting in 2022, but has since backed several measures designed to more strictly regulate the industry.
In 2023, he filed a bill to combat what he called “deceptive” sports betting advertisements. Later that year, he backed a budget amendment that would allot $500,000 for an independent research study “to determine the extent and scope of harms caused by gambling.”
Keenan will likely provide testimony later this week. There’s plenty of time for the amendment to be debated, as this year’s legislative session goes through the month of July.
Conspicuous timing worth noting, but coincidental
This amendment made headlines just one day after operators declined to attend a Massachusetts Gaming Commission panel discussing, among other topics, operators limiting the action of successful players. Sportsbooks lobbied for a discussion to be held during an executive session, but that did not materialize.
The only operator present at the session was Bally’s. They have yet to launch their sportsbook in Massachusetts, and are set to go live next month.
However, Mike Mazzeo from Legal Sports Report reports this change was considered several days before the panel discussion. Massachusetts is also not the only state considering a tax hike. Illinois sports betting may move to a 35% tax rate, and New Jersey sports betting could see an increase to 30%.
How could this affect Massachusetts sports betting?
As mentioned, the proposed 51% tax rate would put the Bay State at the top of the tax charts. That could fundamentally change the way Massachusetts sports betting operators do business.
New York sports betting, for instance, does not have nearly as many sports betting promos as other states with lower tax rates. Operators see spending their money in other states as better investments. With a total of 38 states now offering legal sports betting, there are plenty of places to do so.
It’s possible a higher tax rate acts as a deterrent to both new and existing sportsbooks, too. The 51% tax rate is a significant barrier to entry for those new to the marketplace. Those lagging behind stalwarts FanDuel MA and DraftKings MA, meanwhile, may examine their options.
