Investing.com -- Shares of DraftKings (NASDAQ:DKNG) and Flutter Entertainment (LON:FLTR), the parent company of FanDuel, both edged down 1% on Wednesday after Maryland's newly released budget proposed significant tax increases on sports betting and gambling revenues.
The budget, presented by Governor Wes Moore for the year 2025, includes a plan to raise the sports wagering tax rate to 30% from 15%, and the table game tax rate to 25% from the current 20%. The proposed tax hikes are part of a broader tax reform that aims to make Maryland's tax system "simple, fair, and pro-growth" while also investing in economic growth initiatives.
Governor Moore's tax plan also outlines other changes, such as doubling the standard deduction, consolidating income tax brackets, and introducing new tax rates for higher income levels, in addition to a temporary surcharge on capital gains for households earning above a certain threshold. The corporate tax rate is set to be lowered, with combined reporting implemented to close tax loopholes and broaden the corporate tax base.
The news of increased taxation on sports betting has led to a slight decline in the stock prices of companies like DraftKings and Flutter Entertainment, which operate in the gambling industry and could face higher operational costs as a result of these changes. The Maryland budget plans reflect a growing trend in states seeking additional revenue sources to support economic development and public initiatives.
While the proposed tax hikes are subject to approval and could change before they are implemented, investors in sports betting and gambling stocks are closely monitoring the developments, as any increase in taxation could impact the profitability and growth prospects of companies in this sector.
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