Key points:
- Lawmakers propose a 15%-25% tax rate and strict consumer protection measures for states considering internet gambling
- The framework is modelled on successful practices in states like New Jersey
- With budgetary pressures rising, more states may consider internet gambling as a revenue generator in 2025
Lawmakers from US states where gambling is already legal have introduced a model framework to guide new states considering the legalisation of internet gambling.
Developed by the National Council of Legislators from Gaming States, the proposal outlines best practices – including a tax rate of 15% to 25% and a ban on credit card deposits, aiming to assist states in crafting effective legislation.
The proposal draws heavily from successful existing models, particularly New Jersey's regulatory approach, which has been operational since 2013.
Former New Jersey Division of Gaming Enforcement head David Rebuck, who advised on the initiative, emphasised the model’s alignment with existing frameworks, stating: “Ninety-five percent of this mirrors what we’re already doing in New Jersey, which is good. It’s a great start that builds on what is already in place and operational elsewhere.”
Currently, seven US states – Connecticut, Delaware, Michigan, New Jersey, Pennsylvania, Rhode Island and West Virginia – offer legal online casino games, with Nevada permitting internet poker.
However, many states are still in the deliberation phase. Maryland’s attempt to pass online gambling legislation stalled in April, while New York’s efforts to legalise online casino gaming with a proposed 31.5% tax rate have also faced challenges.
The suggested tax range aims to balance market entry for operators while generating significant state revenue. The framework also emphasises consumer protection measures, including deposit limits of $20,000 within 24 hours and the establishment of state regulatory agencies where they do not already exist.
Good to know: The national average for online gambling tax rates stands at 19%, with Pennsylvania leading at 36% for sports betting and 54% for online slots
Proponents, like West Virginia delegate Shaun Fluharty, highlight its potential to help states ease budget pressures while ensuring responsible market practices, stating: “The thinking was we didn’t want to form a barrier to entry into the market with a high tax rate that only the biggest companies could afford.”
Financial motivations for legalisation are significant, with states recognising potential revenue streams. New Jersey, for example, generated over $414m in tax revenue from online sports and casino betting in the previous year, highlighting the economic potential of regulated internet gambling.
With this in mind, Rebuck predicts increased legislative interest in 2025 as more states explore internet gambling to address fiscal concerns.
