Potential hike in Maryland's tax rate could influence operations of DraftKings and FanDuel
In a recent development, Governor Wes Moore of Maryland has proposed a plan to increase the tax rate on gambling in the state. This proposal, if approved, could significantly impact the gambling sector in Maryland and potentially influence other states to follow suit.
The bill calls for a substantial rise in the tax rate applicable to sports betting revenues, from the current 15% to 30%. This increase could have a significant impact on the state's gambling market, with analysts expressing concerns about its potential effects on casinos and betting companies across Maryland.
One such analyst, Barry Jonas from Truist Securities, has voiced his concerns about the proposed tax increase. If approved, the tax hike could potentially affect MGM National Harbor, a major player in the Maryland gambling scene, as well as companies like FanDuel and DraftKings, due to their presence in the state.
Carlo Santarelli, a Deutsche Bank analyst, estimates that if the tax hike is approved, DraftKings' cash flow may suffer a $30 million hit, while Flutter Entertainment, FanDuel's parent, may face a potential hit of $58 million.
Santarelli also noted that Governor Moore's proposal did not include online gambling, but a potential expansion with the addition of iGaming could bring more proceeds than the increase in the taxes on sports betting. This expansion could provide a silver lining for the gambling sector, offsetting some of the impact of the proposed tax increase.
However, it is too soon to say if Governor Moore's tax increase proposal will receive the support of Maryland lawmakers. The political leader of Maryland mentioned in connection with this possible tax increase is Governor Moore. No other state leaders related to this matter are named in the search results.
If the tax increase in Maryland is implemented, there may be a possibility of other states following suit. Analysts are cautious about the potential impact the tax increase may have on the gambling market in the state, but also acknowledge that it could set a precedent for other states to reevaluate their own gambling tax rates.
The proposed tax increase on gambling in Maryland, if approved, would be higher than the current tax rate in Pennsylvania but lower than in New York. This could make Maryland a more attractive destination for gambling companies, given the lower tax rate compared to its neighbouring states.
In conclusion, Governor Moore's proposal to increase the tax rate on gambling in Maryland has sparked a flurry of discussions among analysts and industry players. While the potential benefits of the tax hike are debated, concerns about its impact on the gambling sector and potential ripple effects on other states remain a topic of concern. The outcome of this proposal will be closely watched as it moves through the Maryland legislature.
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