Pennsylvania’s time at the top of the betting charts could soon be over. The Keystone State surpassed New Jersey and Nevada this year as the commercial betting champion of the United States, thanks to the significant expansion of its digital sector.
Numbers from the Pennsylvania Gaming Control Board (PGCB) indicate that a substantial portion of the market is explicitly derived from the sports betting industry (both retail and online), which generated $500 million in 2024 alone. Total gaming tax revenue, including sports books, online casinos, land-based casinos, fantasy sports, and video-game terminals, represented $2.8 billion.
Potential Self-Sabotage in the Commonwealth
Facing a $3.6 billion fiscal gap for the 2024-2025 period, Commonwealth policymakers are weighing an increased tax on sports betting by a considerable amount. Currently, the excise applies to 36% of gaming revenue, minus promotional fees. However, rumors in Harrisburg are swirling of excise duties as high as 54% for sports betting and 32% for all other online games.
A rate like this would set a very different kind of record for Pennsylvania. It would be the highest statutory tax on sports betting in America, ahead of New York, New Hampshire, and Rhode Island, whose equivalent statutory rates are 51%.
More than anything, it would be a mistake that threatens to unravel Pennsylvania’s market leadership in sports betting, depriving the state of even more tax money to the benefit of out-of-state and dangerous black-market actors.
Pennsylvania’s legal and safe betting market has displaced illicit sources and fed into state coffers precisely because its tax rate is smarter than most other states’ excise duties. Competitors like New York, New Hampshire, and Rhode Island include promotional fees in their excise base, meaning that sports betting operators end up paying far more than their potential earnings, thus drastically increasing the de facto tax.
As the Consumer Choice Center’s 2025 Sports Betting Index makes clear, based on Tax Foundation data, their real excise duties are closer to 86%.
Pennsylvania’s Stable Environment for Legal Play
Though Pennsylvania requires a considerable upfront cost from sportsbooks, which are expected to pay a one-time fee of $10 million and a $250,000 renewal fee every five years, it is one of only a handful of states in the US that spares promotional fees and other discounts from taxation. In that respect, Pennsylvania’s current tax arrangements create a far more predictable and stable investment environment for legal operators, who can continue to offer generous discounts and promotions to consumers without fearing that such options will leave them out of cash once the tax form comes.
Ratcheting the tax up to 54% removes these advantages. It leaves little in the way of earnings for small and medium-sized operators, who have already struggled with low margins in the betting industry. That is particularly worrying for Pennsylvania, which already features a highly concentrated sector, with just 11 online and 12 retail sportsbooks servicing 13 million people. Not only would the decision leave even fewer venues under the control of a handful of operators, but it would also lead to increased uncertainty about future investment, given that taxes are likely to rise in the future if the state cannot resolve its fiscal situation.
Many companies will simply decide that Pennsylvania is not a safe bet.
What Happens When You Mess Up A Good Thing
Worst of all, an excise duty hike bolsters the black market, which does not worry about any lost revenue from taxes, nor does it need to pay extra compliance costs. The experience of other jurisdictions with similar tax levels is instructive. Analysts estimate that legal sportsbooks in New York lost a total of $1.91 billion in revenue to illegal operators in 2023. In terms of taxes, the damage represents a potential $972.1 million in uncollected revenue that New York state never recovered, a figure that exceeds its total annual revenue from mobile sports betting ($861.8 million).
Rhode Island expected $11.5 million in revenue in the 2019 fiscal year, but only collected 1.3% of its stated goal, once again proving the catastrophic returns for high taxes. Since October 2025, the Ocean State has attempted to crack down on six offshore operators, with no success. This task has been made much more difficult by the fact that it has never approved a legal online operator besides International Game Technology.
Ironically, then, the measure is far likelier to decrease (rather than bolster) state revenue while feeding the most dangerous aspects of sports betting.
Stay The Course, Pennsylvania
Ultimately, consumers will be the ones to pay. Many companies will have no choice but to pass on the costs to individual bettors by removing promotions entirely or by cutting winnings. It is also the average taxpayer who will be forced to drive to neighboring states just to enjoy betting on an anticipated match, and it is ordinary people who are ultimately left most exposed to the risks of illegal activity.
Policymakers should not reverse the hard-earned gains of legal and safe sports betting. Pennsylvania can remain a champion in the field if it scraps the planned levy and returns to a stable and predictable tax model. That way, its future tax revenue will continue to grow in line with the growing legal market; after all, current fiscal woes are better solved by restraint than a gamble on excess.
