Maryland’s iGaming Legalization Push Hits a Roadblock

Maryland’s  fiscal year budget has dashed hopes of legalizing internet casino gaming in the state. As part of the efforts to close a projected $3.3 billion budget gap, the governor highlighted various tax measures but did not include provisions for online casinos.

While delegates like Vanessa Atterbeary and Senator Ron Watson presented bills for internet casino gaming, they faced uncertainty regarding age. Over the past few weeks, iGaming had been overshadowed as lawmakers turned their focus to other priorities, such as efforts to ban sweepstakes casinos. Maryland lawmakers have ed other states in pushing for more stringent regulation of such gambling practices, and online casinos have now taken a backseat in legislative discussions.

State Budget Plan Shifts Focus to Sports Betting Tax Hike

Instead of introducing new forms of gambling, the state is looking to enhance tax revenue through an existing sector: sports betting. The new framework proposal calls for increasing the sports betting tax rate from 15% to 20%, which is expected to raise an additional $32 million in revenue. However, lawmakers rejected the notion of increasing taxes on brick-and-mortar casino table games, which had been considered as part of the budget discussions.

As lawmakers and the governor turned their attention toward these tax measures, the legalization of online casinos seemedincreasingly unlikely for this fiscal year.

In another part of the budget discussion, lawmakers have been considering a ban on online sweepstakes casinos. Proponents argue that Maryland has lost out on millions of dollars in tax revenue from illegal wagering, which has been pegged at $6 billion. While this issue has gained significant attention, especially as Maryland Lottery and Gaming issued a cease-and-desist letter to VGW earlier this week, lawmakers remain divided on how to proceed.

A bill to ban online sweepstakes casinos, Senate Bill 860, ed the Senate earlier this month, but a companion bill, HB 1140, has not yet been brought to a vote in the House. Advocates, including those from VGW and the Social and Promotional Games Association (SPGA), have raised concerns about the potential consequences of such a ban.

Governor’s Proposed Tax Increases and Fiscal Year 2025 Projections

Despite the setback in iGaming legalization, the proposed sports betting tax hike is part of broader fiscal efforts to address Maryland’s budget shortfall. Governor Moore’s framework also includes other tax hikes, such as a 3% tax on information technology services and a new income tax bracket for high earners. The budget plan also outlines new taxes on gambling and cannabis, alongside a 1% tax on capital gains for wealthy individuals.

Although Governor Moore’s proposed sports betting tax increase was not as high as he initially requested—he had hoped to raise the rate to 30%—the new rate aligns Maryland with recent tax hikes seen in other states. Ohio and Illinois have both raised sports betting tax rates, with Ohio’s rate moving from 10% to 20% in 2023 and Illinois implementing a progressive tax structure.

Tax Revenue Projections for Fiscal Year 2025 and Beyond

Maryland has already seen significant tax revenue from sports betting in the first eight months of Fiscal Year 2025, totaling $61.1 million. If operator revenues remain consistent through the end of the fiscal year, the state expects to collect an additional $24.1 million compared to FY 2024.

By comparison, Ohio, which also raised its sports betting tax rate, has already collected $109.5 million in the first seven months of FY 2025. Illinois has outpaced both, with $225.5 million in receipts for the same period, far suring its total for FY 2024.

Governor Moore, in announcing the state budget framework, also criticized President Donald Trump’s tariffs and cuts to federal spending, which Moore argues have adversely impacted Maryland. The governor’s remarks came during a budget unveiling aimed at addressing the $3.3 billion budget deficit.

The budget plan, which includes tax increases on the wealthiest residents and higher taxes for technology services, has sparked debate. While Democrats see these measures as essential for modernizing the state’s fiscal structure, Republicans argue that the tax hikes are excessive and shift too much of the burden onto Maryland’s residents.

Despite criticisms, Governor Moore emphasized that the framework aims to balance the state budget while ensuring that 94% of Marylanders would either see no change or benefit from tax reductions. Lawmakers now face the task of finalizing the budget before the legislative session concludes on April 7.

Source:

Maryland governor announces budget framework deal with taxes, cuts, apnews.com, March 20, 2025.