A group of ‘major’ sports betting and online casino operators concerned that Pennsylvania gaming taxes could rise are setting aside millions for next year’s midterm elections, sources tell Legal Sports Report.
The operators intend to form a super PAC, which will let the group openly support politicians and causes throughout the election season. It will launch with $10 million in initial funding.
A source at a Pennsylvania sports betting operator told LSR last week that sportsbooks will have “no choice” but to pass the cost to bettors like they did in Illinois following a per-bet tax that began in July.
“Pennsylvania has rocketed to the top of the list of states where operators are looking to play big during next year’s midterm election,” said an industry source.
Pennsylvania already high cost
The Keystone State is an important online gaming market for operators with its fifth-highest population and both sports betting and online casinos available. Legislators aimed high on taxes and fees knowing companies would pay up to get into the state.
Online sportsbooks pay 36% of net revenue in taxes with 34% sent to the state and 2% for local taxes. PA online casinos pay a 54% tax for online slots while online tables are taxed at 16%. Those taxes are after paying some of the highest licensing fees in the country.
It is so far unclear how large of an increase is being considered in Pennsylvania. Legislative leaders did not respond to requests for comment.
The 36% sports betting tax is already the second-highest for non-monopoly states behind New York. The 54% tax for online slots is only topped by Rhode Island‘s effective 62.45% rate.
Tax hikes are in vogue
Online gaming operators have already seen taxes rise in multiple states. That includes Pennsylvania’s neighbor New Jersey, although those raised taxes are still substantially lower than Pennsylvania.
As of July 1, New Jersey now charges a flat 19.75% tax for all online casino and sports betting revenue.
Other states that failed to raise their sports betting taxes this past session, like Ohio, could try again. Gov. Mike DeWine tried to double the rate last year through his budget just like he doubled it in 2023 to its current 20%.
Illinois has now raised online sports betting taxes twice. Last year, the tax rate switched to a tiered rate up to 40% from a flat 15% rate. On July 1, operators started to pay a 25-cent tax on all bets that increases to a 50-cent tax per wager once the operator passes 20 million bets in a year.
A third increase in Illinois is possible, too. Chicago Mayor Brandon Johnson wants a 10.25% tax on all online sports bets placed within the city, but local legislators have a bill ready to prevent that.
