Arizona tables 35 percentage point increase in sports betting tax
Governor Katie Hobbs said other states’ updates to their tax systems had left Arizona at a “competitive disadvantage”
Arizona is mulling increasing its tax rate on sports betting to as much as 45% for some operators, as revealed in the state’s proposed executive budget.
The $17.7bn budget for full-year 2027, released by Governor Katie Hobbs last month, aims to account for the reduction in federal funding caused by President Trump’s One Big Beautiful Bill Act.
Hobbs has proposed that one way to raise state revenue would be to significantly hike taxes on sports betting from 10% to 45% for “large operators”, defined as those reporting over $75m in monthly revenue.
DraftKings and FanDuel, the state and US market leaders, could therefore be confronted with the 45% rate.
The budget projects the move would generate $145m in revenue for full-year 2027 and $202m for full-year 2029.
Hobbs said: “As the industry changes, it is clear that not all operators are alike, with a handful of large operators capturing the majority of the market.
“Low privilege fees and generous tax deductions have allowed these operators to achieve record corporate profits.
“In response, states across the country have continued to modify and update their regulatory structures since 2021, raising fees and leaving Arizona in a competitive disadvantage.”
Illinois Governor J.B. Pritzker approved a similar budget for his state in 2024, which saw operators taxed up to 40% above a certain revenue threshold. The sliding scale from 20% to 40% replaced the previous flat 15% model.
Last year, Louisiana, New Jersey, and Maryland all implemented more modest tax rate increases.