Arizona Proposes Raising Betting Tax to 45% to Offset Federal Cuts

United States.– February 11, 2026 – www.zonadeazar.com  Arizona Governor Katie Hobbs introduces a plan to drastically increase the tax rate on sports betting from 10 % to 45 % for large operators, aiming to secure additional revenue amid reduced federal funding.

Overview

Arizona Governor Katie Hobbs has unveiled a proposal to raise the tax rate on sports betting revenue for large-scale operators from the current 10 % to 45 % as part of her fiscal 2027 budget plan. The initiative seeks to counteract the impact of federal budget cuts on the state’s finances.

Arizona currently applies one of the lowest tax rates on sports betting in the United States, which has prompted a review as the market continues to expand locally.

Key Details

The tax overhaul targets “large operators,” defined as sportsbooks generating over $75 million in monthly revenue. Under the plan, these operators would see their tax rate increase to 45 %, while smaller sportsbooks and those run by Native American tribes would remain at the 10 % rate.

The proposed tax change is included in a $17.7 billion budget blueprint for fiscal year 2027, with expectations to raise approximately $145 million in the first year and up to $202 million by 2029.

The move comes as Arizona’s sports betting market continues to grow. In 2025 alone, residents wagered more than $8 billion on sports, generating significant revenue for the state.

Political Context

The initiative is part of broader budget negotiations. Governor Hobbs, a Democrat, faces political resistance from the Republican-controlled legislature, which traditionally opposes tax increases. Arizona’s constitution also requires a two-thirds majority to approve revenue-increasing measures, complicating the effort.

Officials argue that the change would be implemented as an adjustment of fees by the Arizona Department of Gaming rather than a direct tax increase, potentially circumventing the constitutional supermajority requirement.

Anticipated Impact

If adopted, major industry players such as DraftKings, Caesars, FanDuel, and BetMGM would be subject to the higher rate, which could affect their cost structures and competitive positioning within Arizona. The proposal also reignites national discussions about balancing regulated gambling growth with fiscal policy and competitive taxation.

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