Will This Football Season Bring Tax Changes for Sportsbooks?

Talks over tax rates in betting states may have cooled off over the summer, but the football betting season could change that.

The 2026 NFL and NCAA football seasons will bring unique challenges for regulated sports betting. Sports prediction markets are more widespread than in past years, with more operators moving into states like California and Texas. Tax changes in some US markets will also face their first true test during the busiest betting season.

These factors raise the question of whether a new wave of tax hikes could be coming in 2027.

No Growth for 2026 NFL Season

Earlier this month, the American Gaming Association announced its projections for the upcoming NFL betting season. In it, the group shared that it expects little-to-no growth for the first time since PASPA was overturned in 2018. 

The biggest reason for the AGA’s projection was the continued growth of sports prediction markets. Kalshi continues to dominate the emerging industry, but rivals are expanding fast. This includes DraftKings, which recently decided to launch its sports contracts in non-betting markets.

If these projections hold true, states could consider tax hikes to ensure industry-generated tax revenue doesn’t begin to dip.

State Tax Hikes Face Big Test

Despite a projected down year, the football betting season will still test tax changes implemented across the US. 

The most recent example is North Carolina, which raised the tax rate for online sportsbooks by 5% over the summer. The state believed this increase would let it raise revenue without operators raising minimums or adding fees. While the tax hike has paid off early, the NFL season will provide a more thorough test.

Illinois added a controversial per-wager fee last summer, shortly after increasing its tax rate. This led sportsbooks to pass the cost on to bettors, resulting in a significant drop in betting handle. However, the fee helped keep tax revenue strong. 

With the Illinois tax system entering its second year, data from the NFL ceiling will show a clearer picture of the long-term impact. With other states discussing adopting their own fee, success in 2026 could give them the confidence to do the same. 

Problem Gambling Keeps Growing

Betting states have used gambling tax revenue to help fund retirement programs, school systems, water supplies, and more. However, each saves a small fraction to help fund and support problem gambling resources.

Unfortunately, problem gambling continues to grow in the US, especially with young bettors. While states could funnel more revenue toward the issue, it would take away from other crucial programs that have begun to rely on that steady funding. 

As a result, states could opt to raise tax rates instead. Illinois's early success suggests a major hike could lead to fewer people placing wagers while keeping tax revenue steady. This limits the number of people problem gambling can affect while still funding the programs states need.