RSI CEO: Sports betting tax hikes are not a “quick-fix solution” 

Rush Street Interactive (RSI) CEO Richard Schwartz has insisted that sports betting tax hikes are not the best way to generate state revenue and plug budget deficits.  

Speaking at the 27th Annual Needham Growth Conference in New York, he was pressed for comment in light of developments in Maryland earlier this week, where Governor Wes Moore pitched doubling sports betting tax from 15% to 30% as part of his fiscal year 2026 budget proposal. 

The revised tax rate would place Maryland among the highest-taxed commercial states, behind only Vermont (31%), Pennsylvania (36%), New York (51%), and Illinois’ graduated tax rate of between 20% and 40%. 

The BetRivers and PlaySugarHouse parent company is live Pennsylvania, New York, Illinois, and Maryland among its 15 US state footprint. RSI not caught at the top end of Illinois’ new thresholds, introduced last year, unlike DraftKings and FanDuel which both pay the 40% rate.

Schwartz, while admitting it is difficult to predict the outcome of Maryland’s legislative session, offered a counter to Moore’s proposal. 

The CEO explained legalizing igaming is a better alternative and that by hiking the rate of sports betting tax, evidence from other countries shows players will be pushed in the direction of the illegal market.  

“What we do know is that states would generate far more taxes from regulating igaming than from raising sportsbook tax rates, plus when you raise sportsbook tax rates, you’ll see fewer players playing the licensed sites over the longer term, and this hurts the states over the longer term.”

“You’re not just impacting taxes, but you’re going to have less protection for consumers and lower overall operating investments in those markets, which is what you’re going to start seeing in Illinois, although the progressive tax rate here maybe doesn’t impact everybody the same way.” 

RSI currently offers online casino in Michigan, New Jersey, Pennsylvania, West Virigina and Delaware, the latter as the sole operator for the state’s lottery.  

Schwartz said his argument that stricter regulation, including tax hikes, leads to a surge in black market activity is supported by several examples in Europe.

While he didn’t cite specific examples from across the Atlantic, a study from the UK’s trade body, the Betting and Gaming Council, pointed to growth of the black market across Europe.

The report noted that in Bulgaria and Portugal, where both nations pay a higher tax rate than neighboring countries, 47% and 31% of all money staked is with unlicensed operators, respectively. 

The RSI chief added that increasing the rate of sports betting tax is “not a quick-fix solution” for budgetary gaps and funding dilemmas.

He added: “I think, over the long haul, you’re going to realize, as Europe did, there’s a lot of negative things that come from ; it’s not a quick-fix solution. 

“What it comes down to is igaming is going to generate multiples more in tax and protect consumers, as well who are also playing on these sweepstakes sites that are unregulated and unlicensed.” 

Schwartz noted that Governor Moore’s proposal would be “less impactful” for RSI given it does not generate significant revenue from its sportsbook operations in Maryland.

However, Schwartz said channelization was a pertinent issue for states to tackle and warned about following a path trodden by European counterparts in the past.

He continued: “There’s an opportunity to realize that growth in this industry is going to come from channelization, having a higher percentage of players in a state playing on a legal, licensed regulated site versus the alternatives.

“You tax higher, you drive players to sites, which is something that hasn’t been seen yet in the US because it’s too new of a development.”

On his hopes for further igaming expansion outside of the seven existing states, Schwartz said the “momentum is now in our favor” as the potential for New York and Illinois to introduce online casino legislation grows, according to the RSI CEO.

He said: “I think the momentum is so strong because in the states that have legalized icasino, almost 80% of the tax is coming from icasino versus sports betting markets like Pennsylvania, New Jersey, and Michigan. 

“It’s becoming increasingly clear that igaming is the best route to generate revenues, increase profits for the state and protect consumers.

“If you have states like Illinois and New York, where we have a really strong opportunity, if either one of those were to legalize, it’d be a tremendous for our company. I think there’s a lot of progress being made and some stronger arguments being made.

“And I do think that the proliferation of this unlicensed gambling is really going to help drive that issue in a way that perhaps hasn’t happened in the past.”

This week, Wyoming and Indiana both introduced online casino bills, while Maryland has also tabled draft igaming legislation that would legalize icasino and ipoker.