Will any US state with legal online sports betting enact a tax rate increase above 40% during 2026?

State tax escalation on OSB has a clear trend: Arkansas at 51%, New York at 51%, Illinois recently to 40% tiered. Multiple states face budget pressures in 2026 and gaming tax is politically easy revenue. States like New Jersey, Pennsylvania, or Colorado could follow Illinois's lead with progressive tax structures. However, the question asks specifically about above 40%, which is a high threshold that even Illinois just reached. The industry is actively lobbying against further increases. About 40% probability — meaningful risk but not base case.

The legislative cycle for state tax changes is typically annual, with most states having legislative sessions in the first half of the year. If no bills are introduced by mid-2026, the probability drops significantly. The Illinois tiered rate increase is the most recent precedent and may have been driven by state-specific budget dynamics rather than a national trend. However, the template now exists for other states. Uncertainty is high because state legislative dynamics are hard to predict from national analysis alone.

The question asks about any state, which broadens the probability net. With 30+ states having legal OSB, the probability that at least one introduces a tax increase above 40% is meaningfully higher than the probability for any individual state. The combination of budget pressure, anti-gambling sentiment, and the Illinois template makes this a genuine risk. However, the gaming industry's lobbying effectiveness at the state level has historically been strong. Slightly below 50% but material.

Tax increases above 40% are politically difficult — they risk driving operators out of the state (as some have threatened). States compete for operator presence and tax revenue. The 51% rates in NY and AR were set at launch, not increased after the fact. Illinois's increase to 40% tiered was notable precisely because it was unusual. Most states prefer to keep rates competitive to maintain operator investment and revenue. Below 35% probability.

This is genuinely uncertain. The trend is toward higher taxes, but the 40% threshold is a high bar. Several states are considering increases (Massachusetts, Ohio, New Jersey have all had proposals). The probability that at least one of these proposals crosses 40% is meaningful but not dominant. States that recently legalized at lower rates may resist quick increases.

The question is about enacting legislation, not proposing it. Many state tax increase proposals die in committee or get negotiated down. The gaming industry's state-level lobbying is well-funded and effective. Even with the Illinois template, the political dynamics of exceeding 40% are complex. The risk is real but the probability of actual enactment in 2026 is below 40%.

Trend toward higher state gaming taxes is clear. 30+ states with OSB creates many opportunities for at least one to cross 40%. But the threshold is high and most states prefer competitive rates. About 38% probability.

The 40% threshold is relatively high. Only Illinois recently crossed it through a tiered structure. Budget pressures exist but gaming tax is not typically the primary solution. Industry lobbying is a counterforce. About one-third probability.

Multiple states considering increases but actual enactment above 40% is a higher bar. The trend is real but the specific threshold and single-year timeline limit the probability. Around 35% is appropriate.