Legislators from states where gambling has been legalized in the United States have proposed a model framework to guide new states considering the legalization of online gambling.
The proposal, crafted by the National Legislators Committee from Gaming States, outlines best practices—including tax rates between 15% to 25% and a prohibition on credit card deposits—aimed at assisting states in developing effective legislation.
The proposal heavily draws on existing successful models, particularly the regulatory approach of New Jersey, which has been in place since 2013.
David Rebuck, former head of the New Jersey Division of Gaming Enforcement, provided advice for the plan, emphasizing the model's consistency with existing frameworks and stating, "95% of it is consistent with what we have already done in New Jersey, which is a good thing. It's a good start, building on what has already been implemented and operated elsewhere."
Currently, seven states in the U.S. (Connecticut, Delaware, Michigan, New Jersey, Pennsylvania, Rhode Island, and West Virginia) offer legal online casino games, and Nevada allows online poker.
However, many states are still in the deliberation stage. Maryland's efforts to pass online gambling legislation were stalled in April, and New York's attempts to legalize online casino games with a proposed tax rate of 31.5% also face challenges.
The suggested tax range is designed to balance market access for operators while generating substantial government revenue. The framework also emphasizes consumer protection measures, including a $20,000 deposit limit within 24 hours and the establishment of state regulatory bodies where none currently exist.
It is worth noting that the national average tax rate for online gambling is 19%, with Pennsylvania having the highest sports betting tax rate at 36%, and online slots at 54%.
Supporters like West Virginia representative Sean Fluharty emphasize that the bill helps states alleviate budget pressures while ensuring responsible market behavior. He stated, "Our idea is that we don't want to create barriers to market entry with high tax rates that only large companies can afford."
The economic incentives for legalization are strong, with states recognizing the potential for significant revenue. For example, New Jersey generated over $414 million in tax revenue last year from online sports and casino gambling, highlighting the economic potential of regulated internet gambling.
With this in mind, as more states explore online gambling to address financial issues, Rebuck predicts an increase in legislative interest by 2025.
