Last updated on February 28th, 2025 at 03:06 pm
Once again, legislators are out to control the tax on online gambling. This time around, Legislators are Proposing a 15%-25% Internet Gambling Tax Rate for states adopting online gambling. Furthermore, their proposal would include a ban on credit card deposits for online gaming.
According to gambling industry news, last week the National Council of Legislators from Gaming States made a model legislation. The model they made would be for states that are considering online gambling within their borders. However, the proposal to set the internet gambling tax is still in the discussion stage. They do intend to further discuss it during their winter meeting next week.
The proposal is made based on current framework by states that already have their own legislation on internet gambling. Furthermore, it also encompasses legislative items that work well in states where online sports betting and casinos is legal.
At the moment, only 7 states in the U.S. offer legal online casino games. These include Connecticut, Delaware, Michigan, New Jersey, Pennsylvania, Rhode Island and West Virginia, The exception is Nevada which offers internet poker but not online casino game platforms and software.
Legislators are Proposing a 15%-25% Internet Gambling Tax Rate for New States
The reason behind their proposal is to create a set of “’best practices” for states trying to enter the online gambling market. The proposal is still a work in progress. According to Shaun Fluharty, a West Virginia Democratic state delegate, many states have been discussing it. However, he said that “were having a hard time getting it across the finish line”
The 13% to 15% Internet Gambling Tax Rate proposal would only apply to New States entering online gambling. Therefore, it would not affect states that currently have their own state regulations and tax rates. One model used to create the tax rate is from New Jersey as they have been a leading in regulating internet gambling since 2013.
David Rebuck, the retired head of New Jersey’s Division of Gaming Enforcement said this is a great start. Especially since “95%” of the content in the proposal is already being done in New Jersey.
Furthermore, the proposal calls for rigorous supervision of internet gambling to safeguard consumers and eliminate undesirable individuals and entities. Additionally, the proposal advocates for the creation of a governmental body to oversee online betting, should such an agency not already be in place.
Last but not least, the proposal would restrict deposits to a maximum of $20,000 within a 24-hour timeframe. One point that is not popular amongst gamblers is that it would ban using credit cards for online gambling.
Reasons for Choosing a 15%-25% Online Gambling Tax Rate
While the proposal asks for a 15% to 25% Online Gambling Tax rate, that is just the starting point. This is because some states have higher online gaming tax rates while others have it at a much lower amount.
Fluharty indicated that the national average tax rate for online gambling stands at 19%, while West Virginia imposes a tax rate of 15%.
He explained, “The rationale behind this decision was to avoid creating a barrier to entry in the market that would be sustainable only for the largest companies.” This is because it would become difficult for bookies to compete against large sportsbooks.
Gambling experts predict that more states will consider online sports betting as they create their budget for the new year.
The proposal put forth by the group does not seek to establish national standards. Regulation of gambling primarily falls under state jurisdiction, and recent efforts to implement federal legislation on the matter have been largely unsuccessful
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