Prior to the General Assembly approving a $50.1 billion budget for the 2025–2026 fiscal year, Pennsylvania abandoned plans to partially finance increased spending by increasing taxes on specific types of gaming.
Rumors surfaced earlier this month that Harrisburg was having private discussions about potentially raising the state's share of online sports betting profits. Currently, the state receives 36% of the net winnings from online sportsbooks. On each wager, they also pay a 0.25% federal excise fee.
The politically split General Assembly looked for new sources of funding because Gov. Josh Shapiro (D) was adamant about extending the tax credit for working low-income and middle-class families and increasing support for public schools in need.
Avoiding Gaming Tax Increases
The gaming lobby immediately raised $10 million for a political action campaign after learning that the Democratic-led House of Representatives and the Republican-controlled Pennsylvania Senate were considering raising taxes on mobile sports betting. Sportsbooks in Pennsylvania sponsored radio and television commercials asking people to get in touch with their legislators and advise them not to raise the tax on sports gambling.
Sportsbooks said that the 36% tax is already high and that they are small-margin enterprises. They asserted that more hikes would result in fewer customer incentives and promotions and drive some gamblers back to illicit, foreign online sportsbooks.
State lawmakers left internet sports betting alone, suggesting that the effort was successful.
One of the highest tax rates for online sports betting is found in Pennsylvania. The only states with greater rates are Delaware and Illinois (50%), New Hampshire, New York, and Rhode Island (51%). Nevada and Iowa have the lowest oddsmaker tax rates at 6.75%, Michigan at 8.4%, and Indiana at 9.5%. No other state levies less than 10% taxes on sportsbook earnings.
Illinois's effective tax on sportsbooks has been increasing over time. In 2024, the state introduced sports betting with a 15% tax. Illinois now imposes a 25-cent fee on each wager an operator makes in addition to the 50% levy.The premium increases to 50 cents after 20 million bets.
Although the so-called "sin industry" apparently survived the budget negotiations unscathed, higher taxes on Pennsylvania's medical marijuana program were also taken into consideration.
“In a divided legislature, we proved once again that Democrats and Republicans can come together to get stuff done for the good people of Pennsylvania — cutting taxes, investing in education and workforce development, supporting law enforcement and reducing crime, and keeping our economy growing,” said Shapiro.
Sports Betting in Pennsylvania
In recent years, Pennsylvania's gaming revenue from sports betting has stabilized. In the state's fiscal years 2022–2023, 2023–2024, and 2024–2025, oddsmakers won $491.9 million, $486.5 million, and $487.6 million.
Bettors have wagered $6,101,971,364 on sports through the first nine months of 2025, both in-person and online. Compared to 2024, when bettors risked $5,734,367,057 from January through September, that is a 6.4% increase. The increase in bets is about $367.6 million.