Legislators propose 15% to 25% tax rate for new states adopting internet gambling
Lawmakers from states where gambling is legal are advancing a proposal for additional states considering the legalization of internet gambling. This proposal includes implementing a tax rate ranging from 15% to 25% and establishing a ban on credit card deposits.
The National Council of Legislators from Gaming States unveiled model legislation intended for states weighing the option of legalizing internet gambling. This proposal will be discussed in detail at the group’s upcoming winter meeting in New Orleans.
The legislation aims to provide a framework that states can utilize to develop their own laws, integrating successful elements from states that have previously legalized internet gambling.
Currently, seven U.S. states allow legal online casino games: Connecticut, Delaware, Michigan, New Jersey, Pennsylvania, Rhode Island, and West Virginia. Nevada, however, provides internet poker without offering online casino games.
“Many states have been discussing this, but were having a hard time getting it across the finish line,” said a representative involved in the discussions. “We’re trying to put together some best practices for them.”
The proposed legislation closely mirrors laws that have been successfully implemented in states like New Jersey, a frontrunner in the establishment and regulation of internet gambling since it was legalized in 2013. Experienced professionals from New Jersey’s gaming enforcement division played a crucial role in advising the lawmakers on this legislative model.
“Ninety-five percent of this reflects what we’re already doing in New Jersey, which is promising,” said an industry expert. “It’s a great start that enhances existing operational frameworks.”
The proposal includes strict regulations aimed at protecting consumers and eliminating fraudulent individuals and companies from the industry. It also suggests the creation of a government agency dedicated to regulating online gaming where one does not already exist.
To promote sound financial practices, it seeks to limit deposits to $20,000 within a 24-hour period and seeks to prohibit the use of credit cards for funding gambling accounts.
The suggested tax rate of 15% to 25% is viewed as a starting point for discussions. Although this range may be higher than what some states impose, it is significantly lower than rates in others, such as Pennsylvania’s 36% tax on online sports betting and 54% on online slot machine games.
According to industry statistics, the national average for online gambling tax rates is approximately 19%, with West Virginia imposing a tax of 15%. “The goal was to avoid deterring potential operators by establishing a prohibitively high tax rate that only larger companies could manage,” the representative explained.
