Arizona Sports Betting Tax Rate: A Comprehensive Breakdown

Arizona legalized sports betting in April 2021 and officially launched its market in September of the same year. With the rise of online and retail sportsbooks, one of the most important topics for bettors, operators, and policymakers is the state’s sports betting tax rate. This article provides a detailed look at Arizona’s sports betting tax structure, including the different rates, how they compare to other states, and what they mean for the industry.

Overview of Arizona’s Sports Betting Tax Rates

Arizona applies two distinct tax rates depending on the type of sportsbook operation:

• Retail (in-person) sports betting: Taxed at 8% of gross gaming revenue (GGR).
• Online (mobile) sports betting: Taxed at 10% of gross gaming revenue (GGR).

Gross gaming revenue is defined as the total amount of money wagered minus the amount paid out in winnings. These tax rates are considered moderate compared to other U.S. jurisdictions.

How Arizona’s Tax Rates Compare Nationally

Arizona’s tax rates are relatively competitive:

• Lower than states like New York (51% for mobile betting) and Pennsylvania (36% for mobile and retail).
• Higher than Nevada (6.75%) and Colorado (10% flat rate for both retail and online).
• Similar to Indiana, which taxes online betting at 9.5% and retail at 9.5%.

Arizona’s approach reflects a balanced strategy aimed at encouraging operator participation while still generating meaningful revenue for the state.

Revenue Generation and Allocation

The tax revenue from sports betting in Arizona is directed toward several key areas:

• The Arizona Benefits Fund, which supports education, infrastructure, and public welfare.
• Tribal agreements and development, since tribal nations also operate sportsbooks under compacts with the state.
• Regulatory oversight, helping to fund the Arizona Department of Gaming’s enforcement and compliance operations.

Since launch, Arizona has seen monthly handle totals consistently in the hundreds of millions, resulting in millions of dollars in tax revenue for the state each month.

Operator Impact and Licensing

Arizona’s tax structure is particularly favorable for sportsbook operators:

• 21 event wagering licenses were made available—10 for professional sports franchises and venues, and 10 for tribal operators.
• Reasonable tax rates make Arizona a profitable market, which has led to partnerships with major brands like DraftKings, FanDuel, BetMGM, Caesars, and Barstool.

The moderate tax burden allows operators to offer more competitive odds and promotions, which ultimately benefits consumers.

Conclusion

Arizona’s sports betting tax rate—8% for retail and 10% for online—is among the more operator-friendly in the United States. This balanced approach has positioned Arizona as one of the top sports betting markets nationally, attracting major sportsbook brands and generating significant revenue for state programs. The tax structure promotes both industry growth and public benefit, making it a model worth watching as more states refine their sports wagering policies.