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Arizona Governor Katie Hobbs is proposing a 45% online sports betting tax ceiling, which could ultimately force some operators to exit the state market.
From SBC Americas:
Hobbs’ executive budget proposes increasing Arizona’s tax rate on sports betting from 10% to 45% for the “large operators” in the state, defined in the budget as sportsbooks that reported more than $75 million in monthly revenue.
Operators that don’t meet that threshold will continue to be taxed at a 10% rate. Arizona’s retail sports betting tax rate of 8% would not be impacted either, as the state’s portfolio of tribal operators would not be required to adhere to the proposed increase.
Joe Brennan, Jr, who was one of the originators of the legal and legislative challenge to The Professional and Amateur Sports Protection Act (PASPA) that resulted in the US Supreme Court overturning the decades long prohibition, expressed concerns over the tax increase.
From Brennan, Jr.
"AZ has a tax rate of ~25% on cigarettes ($2 tx/per pack of 20; avg cost before taxes ~$8/pack) AZ's governor is proposing an increase of sports betting's tax to 45% of the gross Sports betting has state tax rates being set without regard to what is rational."
AZ has a tax rate of ~25% on cigarettes ($2 tx/per pack of 20; avg cost before taxes ~$8/pack)
AZ's governor is proposing an increase of sports betting's tax to 45% of the gross
Sports betting has state tax rates being set without regard to what is rational…— Joe Brennan Jr (@joebrennanjr) February 10, 2026
The budget projects the tax hike would generate over $145 million in revenue.
“As the industry changes, it is clear that not all operators are alike, with a handful of large operators capturing the majority of the market. Low privilege fees and generous tax deductions have allowed these operators to achieve record corporate profits,” Hobbs said. “In response, states across the country have continued to modify and update their regulatory structures since 2021, raising fees and leaving Arizona in a competitive disadvantage.”
Arizona operators include:
- FanDuel Sportsbook – major national operator.
- DraftKings Sportsbook – widely available across AZ.
- BetMGM – partnered locally to operate in AZ.
- Caesars Sportsbook – licensed for AZ betting.
- bet365 Arizona – launched 2024.
- Fanatics Sportsbook – active AZ operator.
- Hard Rock Bet – online and retail sportsbook partner.
- Sporttrade Arizona – newer licensed operator.
- Superbook, Betfred, Betway, Golden Nugget, Desert Diamond Mobile, BallyBet, PrizePicks, and SaharaBets have received approval to operate in the state as well.
Longtime offshore operator BetCRIS, which in recent years has focused primarily on the Latin American market, operates in Arizona under a regulated sports betting license issued by the Arizona Department of Gaming through a partnership with the San Carlos Apache Tribal Gaming Enterprise.
The licensed entity is Plannatech (USA) Corporation and uses the Betcris brand for its sportsbook offering in the state.
- Chris Costigan, Gambling911.com Publisher
