Tax structure
iGaming tax rates by state: why identical products pay 15% or 54%
The short answer
There is no single 'iGaming tax rate' for the US — each live state set its own. New Jersey raised its internet gaming tax to 19.75% for FY2026; Connecticut charges 18% (20% after the first five years); Michigan uses graduated tiers of roughly 20–28%; Pennsylvania taxes online slots at 54%. Rates also attach to different bases — slots vs. table games, gross vs. adjusted revenue — so a headline rate only makes sense next to its definition.
In this article
Ask what a state taxes online casinos and you get one number; ask what the number applies to and you get a statute. The seven-state iGaming market runs on rates that differ by a factor of three — and bases that differ even more — which is why 'highest-tax state' claims are meaningless without the definition attached.
Illustrative example
| State | Headline rate | Base it applies to |
|---|---|---|
| New Jersey | 19.75% (P.L. 2025, c.066) | Internet gaming gross revenue; internet sports wagering taxed at 19.75% plus a 1.25% CRDA assessment, effective FY2026 |
| Pennsylvania | 54% slots / 16% table & poker | Gross gaming revenue by game type — the steep slot rate is the outlier that defines PA's market economics |
| Connecticut | 18% first five years, then 20% | Gross gaming revenue under the tribal compacts' rate schedule |
| Michigan | ~20–28% graduated | Tiered rates on adjusted gross receipts by revenue band, per statute |
Why bases matter as much as rates
- Gross vs. adjusted revenue: states that deduct promotional spend before taxing produce a lower effective rate at the same headline number — the reason raw rate tables mislead.
- Split rates: Pennsylvania's 54% applies to slots but only 16% to table games and poker, so a casino's blended rate depends on its product mix.
- Step-ups: Connecticut's rate rises after the first five years of operation, so 'the CT rate' has a date attached.
- Sports vs. casino: a state's sportsbook tax rate says nothing about its iGaming rate — NJ taxes both at 19.75% now, but most states tax the two verticals very differently.
What the rates do to the market
High rates do not kill markets — Pennsylvania is the largest iGaming state at 54% on slots — but they shape them: thinner marketing, fewer marginal operators, more vertical integration between licensees and platforms. They also set the arithmetic of expansion debates: every bill pending in a new state is partly a negotiation over where on the NJ-to-PA spectrum the new market will sit, because that number decides how much an operator can spend acquiring a player it will keep for years.
For the revenue figures these taxes feed, see US commercial gaming revenue in 2025, how to read the reports and why 'missing' and 'zero' differ in the tables.
