Maryland Increases Online Sports Betting Tax to 20%

by Lisa Spencer, May 30, 2025

Governor Wes Moore recently signed HB352 into law. Under this legislation, Maryland’s online sports betting tax rate will increase from 15% to 20%.

Less Than What Was Originally Proposed

Online sportsbook operators in Maryland are facing a greater tax bill after the rate was raised from 15% to 20% in House Bill 352, also known as the Budget Reconciliation and Financing Act of 2025.

The law, signed on May 21, aligns Maryland with states like Illinois and Ohio, which have similar online betting tax rates. While the increase is a big change from the previous rate, it results from a compromise after the governor’s original proposal didn’t get enough support from lawmakers.

Governor Moore initially pushed for a much higher tax rate—up to 30%—to better match nearby states and improve Maryland’s finances. However, lawmakers opted for a smaller increase, agreeing on a 20% rate. This compromise aims to increase revenue while keeping Maryland appealing to sportsbook operators.

With the new rate, Maryland now matches states like Ohio and Illinois, which also tax online sports betting at 20%.

Revenue Allocations Target Education Funding

Under the new tax plan, 95% of sports betting tax revenue will still go to the Blueprint for Maryland’s Future Fund, which supports education programs across the state. The other 5% will go to Maryland’s General Fund.

Retail sportsbooks will still be taxed at the original 15%. The new 20% tax only applies to online betting operators. Since sports betting began in Maryland in December 2021, it has brought in nearly $150 million for the state. For fiscal year 2025 alone, over $61 million has already been collected, and the new tax rate is expected to add another $32 million to the upcoming budget.

Industry Impact and National Trend

DraftKings, one of Maryland’s 11 licensed online sportsbooks, has already accounted for the new 20% tax rate in its financial plans. Due to regulatory and tax changes like the increase in Maryland, the company recently projected a $30 million drop in revenue and a $26 million decrease in adjusted EBITDA for 2025.

“This wasn’t just about balancing a budget,” Moore noted in a press release. “It was about weathering two storms: A fiscal crisis and a new White House that attacks our economy.”

Maryland is the first state in 2025 to officially raise its sports betting tax rate, though other states are considering similar changes. In Louisiana, the House has passed a bill to increase the tax from 15% to 21.5%. Ohio, which raised its rate to 20% last year, is considering another increase. Meanwhile, New Jersey has proposed increasing its online sports betting tax from 13% to 25%.

Meanwhile, starting in July 2025, Colorado will stop allowing operators to deduct free bets from their taxable revenue, effectively increasing their tax burden.