Hobbs Wants to Make Arizona Sports Betting Tax Among Highest in the US

• Governor is proposing a 45% tax rate on select operators
• The state currently levies a 10% on internet sports wagering
• As is the case in Illinois, the proposal targets the largest operators

In the search for more revenue, Gov. Katie Hobbs (D-AZ) wants to boost Arizona’s sports betting tax to 45%, or more than quadruple the current rate of 10%.

Her fiscal 2026 budget of $17.7 billion unveiled last month contains a provision, that if passed, would boost the revenue the state collects from online sports betting by $145 million. Online sports betting debuted in Arizona in 2021 and since then, the state has become one of the fastest-growing markets for that form of wagering in US.

Arizona was among the states where operators most rapidly eclipsed $1 billion in combined revenue and one of the fastest to reach $15 billion in combined handle. The budget must go into effect before the 2026 fiscal year commences on July 1.

Illinois Inklings in Hobbs Plan

Under guidelines set forth by the Arizona Department of Gaming (ADG), up to 20 sportsbook operators can do business in the state, but in a plan that seems somewhat inspired by Illinois, the Hobbs plan calls for the 45% tax rate to be applied only to the internet sportsbook operators doing at least $75 million in monthly business.

Translation: If the Hobbs tax proposal becomes law, it’d only apply to Caesars Sporrsbook, DraftKings, Fanatics, and FanDuel, based on current data.

Last year, the Midwest state implemented a new levy of 25 cents per wager on an operator’s first 20 million booked bets, with that rate doubling to 50 cents per bet for each wager placed after that initial 20 million, which also primarily affects the largest operators.

Arizona Could Climb Ranks of Sports Betting Tax Rates

Confirming that many states view sports betting as an important revenue source, Louisiana, Maryland, New Jersey, and Washington, DC joined Illinois last year in increasing related taxes. Still, it remains to be seen if Hobbs has the political capital to more than quadruple the sports betting tax, which may be a tough task given that both houses of the state legislature are controlled by Republicans. She’s also up for reelection this year.

It is clear that if the Hobbs plan becomes law, Arizona would go from having one of the country’s lowest sports wagering taxes to one of the highest. Only Delaware, Illinois, New Hampshire, New York, Oregon, and Rhode Island apply internet sports wagering levies in excess of 45%, according to The Tax Foundation.