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Maryland Tax Rate Increase May Impact DraftKings, FanDuel
A recently proposed tax rate increases on sports betting and table games in Maryland, if approved, may impact the gambling industry
Amid plans for a tax hike in Maryland, two analysts explored the potential impact increasing the tax rate may have on the gambling sector.
Proposal in Maryland Seeks to Raise Table Games and Betting Taxes
Earlier this week, Gov. Wes Moore uncovered a new proposal calling for an increase in the tax rate on gambling in Maryland. Per the proposal, he called for a rise in the tax applicable to table game winnings. If approved, Gov. Moore’s proposal would increase the table game winnings tax from 20% to 25%.
On the other hand, the bill also called for a significant rise in the tax rate applicable to sports betting revenues. It’s safe to say that Maryland’s sports betting tax of 15% on revenue is relatively low, especially when compared to nearby Pennsylvania where the sports betting revenue tax is 36%.
However, under Gov. Moore’s proposal, the sports betting tax would significantly increase from the current 15% to 30%. Yet while that’s still lower when compared to Pennsylvania, or New York, where betting is taxed at 51%, such a move is expected to affect the market.
If the Tax Rate in Maryland Is Increased, More States May Follow Suit
Despite fears about the potential impact, it is important to note that Moore’s tax increase was only recently proposed, and it is too soon to say if it will receive the support of Maryland lawmakers. Still, this doesn’t mean that analysts are not cautious, considering the potential impact the tax increase may have on casinos and betting companies across the state.
Barry Jonas, an expert analyst with Truist Securities, who was recently quoted by Complete iGaming, explained that the announced proposal for a tax increase left him “feeling crabby.” In a note to investors, the expert added: “We expected that 2025 would bring higher volatility to digital gaming stocks especially given this ever present risk. On the land-based side, we were not expecting this—with MGM National Harbor bearing the brunt of impact.”
Concerningly, Jonas said that if the proposed tax increase is approved, more states may consider similar tax hikes. He did not elaborate what would be the impact for the sector if that happens. Still, Jonas did not rule out the expansion of gambling options in Maryland with the addition of iGaming.
FanDuel and DraftKings May Be Affected by the Tax Hike
Carlo Santarelli, a Deutsche Bank analyst, was also cautious about his prediction about the potential impact of the tax hike on the gambling sector in Maryland. He estimated that if Gov. Moore’s proposal is approved, DraftKings’ cash flow may suffer from a $30 million hit.
Another company that may be impacted, if the tax bill is approved, would be Flutter Entertainment, FanDuel’s parent. According to Santarelli, the hit for Flutter may be in the realm of $58 million. Not unexpectedly, considering FanDuel’s presence in Maryland, the leading brand may also be affected.
The expert added that Gov. Moore’s proposal didn’t include online gambling, despite the previous expectations. Santarelli said that a potential expansion with the addition of iGaming may bring more proceeds than the increase in the taxes on sports betting. Despite the initial concerns about Moore’s plan, the Deutsche Bank analyst reiterated that the tax hike remains a proposal, and it is yet to receive approval by the state’s legislators.
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Jerome brings a wealth of journalistic experience within the iGaming sector. His interest in the industry began after graduating from college, where he regularly participated in local poker tournaments. This exposure led him to the growing popularity of online poker and casino rooms. Jerome now channels all the knowledge he's accrued to fuel his passion for journalism, providing our team with the latest scoops online.
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