Arizona Governor Proposes Sports Betting Tax Increase in Latest Budget

• Arizona Gov. Katie Hobbs (D) has proposed a sports betting tax increase in her latest $17.7 billion budget
• Hobbs proposed raising the state’s tax rate to 45% for operators who bring in $75 million or more in revenue for a month
• Arizona’s tax rate is currently at 10%, the fifth lowest in the country

Arizona Gov. Katie Hobbs (D) is proposing a 350% increase to the state’s sports betting tax rate for its most profitable operators.

In her latest $17.7 billion budget proposal, Gov. Hobbs proposed a new 45% Arizona sports betting tax rate for operators who bring in $75 million or more in revenue per month, an increase from the state’s current 10% rate.

Arizona currently has the fifth lowest sports betting tax rate in the country.

Latest State to Propose Increase

The rate increase to 45%, according to the proposal, would bring in more than $145.9 million in sports betting tax revenues for fiscal year 2027. The revenues project to increase to $202.4 million by fiscal year 2029.

“The increased fee would have no impact on Tribal operators. The tiered structure would more closely align the Event Wagering fees with those set by other states. Arizona’s 10% fee is among the nation’s lowest, with only four states charging lower rates. In contrast, New York, New Hampshire, and Oregon all assess the highest fee of 51%,” according to the proposal.

Over the last year, four states have increased their sports betting tax rates. New Jersey Gov. Phil Murphy (D) signed the state budget into law this past June, which saw the Garden State increase its sports betting, iGaming, and daily fantasy sports tax rate to 19.75%.

Maryland Gov. Wes Moore signed HB 352 into law this past May, which included a sports betting tax rate increase to 20%.

Louisiana Gov. Jeff Landry (R) also signed a bill into law this past June, which saw the Pelican State increase its online sports betting tax rate from 15% to 21.5%.

Finally, Illinois Gov. J.B. Pritzker (D) approved the state’s fiscal year budget in June, which included a new tax on Illinois sports bets. The new tax will set a charge on the first 20,000,000 online sports bets taken in the state, and an increased charge on every bet taken thereafter. The new fee set a $0.25 charge on the first 20,000,000 online sports bets taken in the state each year, which increases to $0.50 for every single bet taken after the initial 20,000,000 bets.

Rate Increase…or Is It?

The budget proposal includes a tax rate increase to 45% for an operator who averages $75 million in revenue per month. However, no Arizona sports betting operator – not even its most profitable in FanDuel or DraftKings – has come close to approaching $75 million in revenue for a single month.

The two sports betting giants typically report anywhere from $15 million to $35 million for a month in terms of revenue.

It is possible the budget proposal actually meant $75 million or more in handle per month, which would make more sense. If this is the case, FanDuel and DraftKings would be guaranteed to be beholden to the new tax rate, while BetMGM, Caesars Sportsbook, and Fanatics Sportsbook would likely come close to the new sports betting tax rate tier as well.

Sports Betting Dime has reached out to the Arizona Department of Gaming for clarification on the budget proposal’s wording.