US Gambling Tax Hikes 2026 – State Tracker and the Per-Bet Fee Problem

US Gambling Tax Hikes 2026 – State Tracker and the Per-Bet Fee Problem

North Carolina raised its sports betting tax from 18% to 23% on 7 July 2026, the fifth state to lift online gambling rates since mid-2025. The US is not repeating the UK's single 40% hammer. It is running fifty separate experiments, and one of them is already shrinking bet counts.

Key Takeaways

• Five states raised online gambling taxes between July 2025 and July 2026
• North Carolina moved to 23% and added a 6% prediction-market levy
• Illinois' per-bet fee cut May 2026 wager counts by 21% year on year
• Ohio, Michigan and West Virginia rejected or stalled their own hike bills
• A federal 90% cap on deducting gambling losses took effect 1 January 2026

We tracked every enacted rate change, the bills that died, and the one mechanism that behaves differently from a normal tax. The short version: rate increases on gross gaming revenue have barely dented US volumes, while Illinois' charge on each individual wager has.

The enacted hikes

Four states moved in 2025 and one in 2026. Every change hit online revenue only – land-based rates were left alone in each case, which tells you where legislators think the money is.

New Jersey's A5803 unified iGaming and online sportsbook revenue at a single 19.75%, landing well below Governor Murphy's opening bid of 25%. The state's standing 1.25% investment alternative levy sits on top, so the real take on online revenue runs near 21%. The result was immediate: New Jersey booked a record $925.7 million in gaming taxes in FY2026, up 42.3%.

Louisiana's chairman was blunt about how the sausage got made. The opening proposal there was 50%, and the board never expected it to survive.

North Carolina's SB 257 did something the others did not. Alongside the move to 23%, it imposed a 6% tax on the net trading-fee revenue of prediction-market platforms, pulling Kalshi and Polymarket into the state tax base for the first time. Only Kentucky and Illinois had done that before. It is a direct answer to the regulatory gap that let event contracts sidestep state gaming law entirely, and it arrived with new audit powers letting revenue officials inspect individual bettors' wagering records.

North Carolina collected more than $133 million in sports betting tax in FY2026. At 23%, the same period would have produced over $170 million.

The per-bet fee is a different animal

Illinois converted its flat 15% to a tiered 20–40% structure in 2024, then in July 2025 added something new: 25 cents on every online wager for an operator's first 20 million bets in a fiscal year, doubling to 50 cents after that threshold.

A percentage of gross gaming revenue scales with operator profit. A per-wager charge does not. It taxes activity, so it falls hardest on the low-stakes, high-frequency bettor – exactly the customer a $2 parlay leg belongs to. FanDuel, DraftKings and Fanatics did the obvious thing and passed it through as a flat per-bet surcharge from autumn 2025.

The data since then is the clearest natural experiment in US gambling taxation:

• May 2026 handle: $1.14 billion, down 10.2% year on year – the steepest monthly drop of 2026
• Wager count: down 21% year on year
• Adjusted revenue: $118.9 million, down only 1.7%
• Market hold: 10.4%, with FanDuel at 14.5%

Read those together. Illinois lost a fifth of its bets and barely any operator revenue, because the bets that vanished were small ones and the hold on what remained went up. Illinois has now recorded four straight year-on-year handle declines in 2026 while still clearing $1 billion a month.

State Representative Jehan Gordon-Booth, who helped write Illinois' gambling law, put the warning plainly: what lawmakers think a rate rise will deliver is not what arrives.

What died in the 2026 sessions

The hike wave is not one-directional. Three states looked at increases this year and did not deliver them.

West Virginia filed HB 4398 on 16 January 2026, proposing a jump from 10% to 25% – a 150% rate increase that would have moved the state from one of the cheapest jurisdictions to the top band. It never left committee. The 60-day session closed in mid-March with the bill pending.

Ohio rejected Governor DeWine's push to double the sports betting tax from 20% to 40%, having already doubled it from 10% in 2023. Michigan turned down its own proposals in the 2025 cycle. Mississippi's House passed a tax rise in February 2026, but only as a rider on a bill to legalise online sports betting that the state does not yet have.

Analysts expect the next round of proposals to target the low-rate holdouts: Kansas, Iowa and Indiana.

The federal layer nobody voted for

While states argue over rates, a federal change hit players directly on 1 January 2026. The One Big Beautiful Bill Act capped the deduction of gambling losses at 90% of winnings. Under the old rule you could offset 100%.

The arithmetic is brutal for anyone with high turnover. Win $100,000 and lose $100,000 across a year and you have made nothing, but you can now deduct only $90,000 – leaving $10,000 of phantom income to pay tax on. It applies to slots, table games, lottery and sports betting alike.

Repeal attempts have stalled. Representative Dina Titus' FAIR BET Act, which would strike the 90% limit out of IRC Section 165(d), was declined by the House Rules Committee on 12 January 2026. The same day, Representative Max Miller introduced the FULL HOUSE Act (HR 6985) proposing effectively identical changes with bipartisan backing. Neither has moved since.

The market these taxes are aimed at

Legislators are not taxing a struggling industry. US commercial gaming revenue hit a record $78.62 billion in 2025, up 9.1%, and paid $17.86 billion in direct gaming taxes, up 12.3%.

Online is where the growth lives. iGaming across the seven regulated states reached $10.73 billion, up 27.6%, with Pennsylvania alone at $3.46 billion – nearly a third of the national total. Commercial sports betting revenue came in at $16.89 billion, up 22.6%. In both Pennsylvania and New Jersey, iGaming out-earned land-based casinos for a full year for the first time.

Q1 2026 combined online sports betting and iGaming revenue set another record at $6.19 billion, the seventeenth consecutive quarter of growth.

That is the case for the hikes and the case against them in one set of numbers. Online is growing fast enough to tax, and the seven-state iGaming footprint is small enough that a bad rate can push players to the unlicensed sites we exclude from our casino rankings rather than to a competitor down the street.

What this means for 2027

The pattern across five enacted hikes is a ceiling around the low twenties. No US state has gone near the UK's 40%, and the two that tried – Ohio at 40%, Louisiana at 50% – were pulled back by their own legislatures. The federal budget squeeze that industry watchers expect to push states toward gambling revenue has not yet produced a breakout rate.

The mechanism is the story to watch, not the percentage. Per-bet fees are spreading because they are politically easy to sell and hard for operators to absorb quietly, and Illinois has shown they change player behaviour in a way a GGR rate does not. Prediction-market levies are following the same path, with three states now taxing event contracts.

FAQ

Which US states raised online gambling taxes in 2026?

North Carolina is the only state to enact an increase in 2026, moving sports betting from 18% to 23% in the budget signed on 7 July. New Jersey, Maryland, Louisiana and Illinois all raised rates effective in 2025.

What is the highest online gambling tax rate in the US?

New York remains the highest at 51% on sports betting revenue, unchanged. Among the states that recently raised rates, North Carolina's 23% is the top figure, followed by Louisiana at 21.5%.

Does the Illinois per-bet fee come out of my stake?

Effectively yes at the major books. FanDuel, DraftKings and Fanatics added their own per-wager surcharges in Illinois from autumn 2025, so the state's 25–50 cent charge reaches you as a small fee on each bet placed.

How does the 90% gambling loss deduction cap work?

From 1 January 2026 you can deduct only 90% of your gambling losses against your winnings on a federal return. If you break even over a year, you will still show taxable income equal to 10% of your losses.

Are US taxes catching up with the UK's 40% rate?

Not yet. The highest recent US increase landed at 23%, and proposals at 40% and 50% were rejected in Ohio and Louisiana. US pressure is showing up in new mechanisms such as per-wager fees rather than in headline rate parity.

Sources

1. 1Legal Sports Report – NJ online casino and sports betting tax increases pass both chambers – A5803, 19.75% unified rate
2. 2PlayNJ – New Jersey gaming taxes reach record $925.7M – FY2026 collections, 42.3% rise
3. 3Bettors Insider – North Carolina governor signs budget hiking sports betting tax to 23% – SB 257, 6% prediction-market levy, 7 July signing
4. 4Legal Sports Report – North Carolina joins list of states to raise sports betting taxes – FY2026 collections comparison
5. 5iGaming Business – NCLGS lawmakers on whether 2026 tax hikes backfire – Louisiana 21.5%, Illinois tiering, Gordon-Booth and Hebert quotes
6. 6SBC Americas – How much is the Illinois per-bet fee costing sportsbooks? – 25c/50c structure and operator pass-through
7. 7IllinoisBet – Wagering volume keeps sliding as sportsbooks hold steady – May 2026 handle, wager count, hold
8. 8iGaming Business – US gambling legislation roundup – West Virginia HB 4398 and 2026 session bills
9. 9SBC Americas – West Virginia gaming tax hikes on the table for 2026 – 10% to 25% proposal detail
10. 10Covers – Mississippi House passes tax hike on proposed online sports betting expansion – February 2026 vote
11. 11Forbes – Gambling tax alert: new law cuts loss deductions – 90% cap mechanics
12. 12GamblingNews – House Rules panel stops FAIR BET Act – 12 January 2026 committee decision, FULL HOUSE Act HR 6985
13. 13American Gaming Association – State of the States 2026 – $78.62bn GGR, $10.73bn iGaming, $17.86bn taxes
14. 14CasinoReports – AGA State of the States 2026 analysis – growth rates, Pennsylvania and New Jersey iGaming milestones