Wyoming legislators are aligning with a national pattern of evaluating hikes in sports betting taxes.
In the Cowboy State, legal sports betting takes place through commercial online sportsbooks and at tribal casinos in person. Mobile sports betting platforms in Wyoming face a 10% state tax on their gross revenue, or the amount retained after payouts for winning bets.
That tax might soon rise after the Legislature’s Select Committee on Capital Financing and Investments was informed by the Legislative Service Office that Wyoming’s 10% rate is nearly half the national average. Karen Vaughn, a financial analyst in the Legislature’s nonpartisan advisory office, informed the Select Committee that the typical tax rate in states with legalized online sports betting is approximately 19%.
Wyoming’s minimal tax, though, rendered the market appealing for sportsbooks to pay the $100K licensing fee for a duration of five years (renewals cost $50K for every subsequent five-year term). With Wyoming's population at under 600K, the smallest of all 50 states, sportsbooks indicated that a low tax was essential to generate interest in establishing operations there.
Proposed Increase in State Taxes
Wyoming, though small in population and having inconsistent cell phone/internet connectivity, boasts a competitive online sports betting scene featuring five operators: FanDuel, DraftKings, BetMGM, Caesars Sportsbook, and Fanatics. The renamed Barstool Sportsbook — ESPN Bet — has been sanctioned by the Wyoming Gaming Commission but has not launched yet.
Upon discovering that Wyoming may be foregoing state tax revenue, Rep. Liz Storer (D-Jackson) proposed to draft a bill to increase the tax on online sports betting. Storer mentioned she would first incorporate a rise to 20%, although Select Committee members informed the public that this would merely be a baseline.
Legislative modifications to the current online sports betting tax would not affect the 10% tax on sports betting earnings from tribal casinos, which is regulated by Class III gaming compacts between Native American tribes and Gov. Mark Gordon (R).
Wyoming's online sportsbooks are expected to resist any tax hike. Wyoming ranks as one of the least profitable sports betting states, generating less than $20 million in annual earnings for bookmakers.
In contrast, oddsmakers in New York reported over $2 billion in net winnings last year.
Increases in State Taxes
Wyoming’s consideration of an increase in sports betting taxes follows Illinois lawmakers raising their effective tax on online sportsbooks twice over the last two years. Top sportsbooks DraftKings and FanDuel reacted to the latest tax increase by adding 50-cent fees to every wager placed.
Lawmakers in New Jersey are contemplating increasing the state’s 13% effective tax on profits from online sportsbooks, as the nearby New York’s online sports betting industry continues to flourish even with a 51% tax, one of the highest in the country.
Earlier this month, the Louisiana State Legislature sent Gov. Jeff Landry (R) a bill to raise the online sports betting tax from 15% to 21.5%. Landry is anticipated to endorse the legislation.
Bookmakers claim that increased taxes further disadvantage their legal businesses compared to offshore sportsbooks, which do not pay taxes and consequently frequently provide better odds along with more promotions and incentives.