Arizona Governor Katie Hobbs has unveiled a plan to sharply raise the state’s sports betting tax, but only for the largest sportsbook operators. As part of her FY 2027 executive budget, Hobbs is proposing a new tiered tax structure that could push the top rate as high as 45%, while leaving smaller operators and tribal partners untouched.
The move is positioned as a response to market concentration and follows a broader national trend of states revisiting how much revenue they collect from legal sports betting.
Arizona legalised sports betting in 2021 with a flat tax rate of 10% on mobile wagering revenue and 8% on retail bets. Governor Hobbs now wants the Department of Gaming to apply different rates based on operator size.
Under the proposal:
The budget makes it clear that tribal operators would not be affected by the change.
The headline figure is the 45% top rate, but its real impact depends on how the state defines “average monthly revenue.”
In sports betting, revenue is different from handle:
Recent Arizona gaming reports show the entire market generates around $80–83 million per month in sportsbook revenue before promotional deductions. If the $75 million threshold refers strictly to revenue, only one or two operators may ever cross it at the same time.
If lawmakers interpret the threshold as handle rather than revenue, the impact would be much wider.
Monthly data shows several major sportsbooks easily exceed $75 million in wagers, including FanDuel, DraftKings, BetMGM and Fanatics. That scenario would push multiple national brands into the higher tax bracket.
The budget text repeatedly uses the word “revenue,” not wagers, meaning lawmakers will need to clarify the metric if the proposal advances.
Arizona currently has one of the lowest sports betting tax rates in the US at 10%. Only a few states tax sportsbooks less.
A 45% top tier would move Arizona close to the most heavily taxed markets in the country, alongside states such as New York and Illinois, which already use aggressive tax models on sportsbook revenue.
Arizona’s proposal follows similar moves elsewhere in the US. States including New Jersey, Maryland, Louisiana and Illinois have all raised sports betting taxes in recent years as governments look to capture a larger share of sportsbook profits.
The trend reflects a shift away from the low-tax models many states adopted when legal sports betting first launched.
Republican lawmakers, who control both chambers of Arizona’s legislature, have raised concerns about the proposal. Some argue that a large tax increase could reduce competition, lead to worse odds for bettors and push players toward illegal offshore betting sites.
There is also disagreement over whether the increase would require a two-thirds legislative vote under Arizona’s constitution, potentially complicating its path to approval.
Governor Hobbs introduced the budget in mid-January, starting negotiations that will run through the current legislative session. Key committee deadlines fall in February and March, with final budget talks expected in April.
The deadline to pass Arizona’s budget is 30 June. Until then, bettors and sportsbook operators alike will be watching closely to see whether the proposed tax hike becomes law — and how it could reshape Arizona’s betting market.
Sports betting is legal in much of the United States, apps are easy to use,…
Mississippi lawmakers have once again pushed forward a bill to expand sports betting, as the…
Fresh court filings suggest the alleged match-fixing case involving two Cleveland Guardians pitchers runs far…
American odds are everywhere in US sports betting. Whether you are looking at the moneyline…
DraftKings has widened its prediction markets, adding player-focused event contracts through a new partnership with…
Sports betting continues to surge across the United States, driven by major events like the…