The state of Arizona, in the United States, proposed a significant increase in the tax on sports betting, targeting exclusively the largest market operators. The proposal is part of the executive budget for fiscal year 2027, presented by the governor Katie Hobbsand provides a tiered tax structurewith a maximum rate of 45%.
The measure comes amid a national movement to review tax policies applied to the sports betting sector, especially given the growing market concentration in the hands of a few global companies.
Why does Arizona want to increase the betting tax?
According to the budget document, the governor argues that:
“A small number of large operators are capturing most of the market. Low privilege rates and generous tax deductions have allowed these operators to achieve record corporate profits.”
The state government sees the change as a way of balance competitiondifferentiate large and small operators and increase public revenue without affecting tribal operators.
How does betting taxation work in Arizona today?
Sports betting was legalized in Arizona in 2021. Currently, the taxation model is simple:
- 10% on game revenue (GGR) for online betting
- 8% for retail bets (physical houses)
What changes with Governor Katie Hobbs’ proposal?
The proposal creates two levels of taxationbased on the average monthly income from the operator:
📊 Proposed tax structure
- Average monthly revenue below US$75 million
➝ Maintains the current rate of 10% (8% in retail) - Average monthly revenue above US$75 million
➝ New rate 45%
📌 Important:
The budget makes clear that tribal operators would not be affected for change.
Estimated financial impact to the state
According to official projections, the tax increase could generate:
- US$145.9 million in 2027
- US$202.4 million in 2029
The values would be directed to the Arizona State General Fund.
Key point of discussion: what is “average monthly income”?
The great ambiguity of the proposal lies in the concept of “revenue”.
In the sports betting market, there are two main metrics:
- Handle (volume staked): total money bet by users
- Revenue/GGR: amount that the operator retains after paying prizes to winners
📌 How Arizona reports today
The reports from the Arizona Department of Gaming (ADG) clearly distinguish these concepts.
Total Market Monthly Revenue Examples:
- October 2025: US$82.9 million (adjusted gross revenue)
- November 2025: US$80.8 million
👉 This indicates that the entire state marketcombined, barely exceeds the US$75 million trigger — which would make it unlikely that multiple operators would be hit at the same time if the base is GGR.
What if “revenue” means volume bet?
If the government is referring to the handlereality changes completely.
📱 Volume bet per operator (handle)
October 2025
- FanDuel: $317.1 million
- DraftKings: $293.7 million
- BetMGM: $102.0 million
- Fanatics: $88.2 million
November 2025
- FanDuel: $313.8 million
- DraftKings: $302.3 million
- BetMGM: $102.5 million
- Fanatics: $84.3 million
In this scenario, several carriers would easily surpass the $75 million thresholdbeing directly impacted by the 45% tax.
📌 The budget text, however, explicitly mentions “average monthly income”and not volume bet — something that will still need to be clarified in the legislative process.
How does Arizona compare to other US states?
🔽 Lowest Tax States
- Nevada and Iowa: 6.75%
- Michigan: 8.4%
- Indiana: 9.5%
- Arizona (current): 10%
🔼 States with highest taxes
- New York, New Hampshire and Oregon: 51%
With a rate of 45%Arizona would join the group of the most aggressive states in taxing sports betting.
National trend: other states also raised taxes
In recent years, several US states have raised their rates:
- New Jersey: 13% → 19.75% (July/2025)
- Maryland: 15% → 20% (July/2025)
- Louisiana: 15% → 21.5% (August/2025)
- Illinois:
- Progressive structure up to 40%
- Tax per bet ($0.25 to $0.50)
- Municipal tax 10.5% in Chicago
Furthermore:
- West Virginia evaluates increasing from 10% to 25%
- Ohio discussed raising it from 20% to 40%, but retreated
Political and legislative challenges in Arizona
Even with support from the Executive, the proposal faces obstacles:
- THE Arizona Constitution demands two-thirds majority for laws that increase state revenue
- The government argues that this is a regulatory feewhich could be approved by a simple majority
- You Republicans control the Legislature and disagree with this interpretation
Republican congressman Jeff Weningerauthor of the law that legalized betting in 2021, harshly criticized the proposal:
“Very high taxes can be passed on to customers, pushing bettors into the illegal market and reducing revenue.”
Conclusion: what does this proposal signal for the iGaming market?
Arizona’s proposal reinforces a clear trend in the United States:
👉 States seek to extract more revenue from large sports betting operatorsespecially in mature markets.
For the global market — including the Brazilwhich advances the regulation of betting — the debate serves as strategic alert on:
- Progressive tax structures
- Political pressure on large operators
- Risks of impact on the consumer and the illegal market
The outcome is still uncertain, but the Arizona case could become international reference in the debate about taxation in iGaming.
Fonte: Gaming365 – Brasil
