Wyoming legislators are considering changes to the state’s gambling tax structure after discovering that current rates for online sports wagering are lower than those in many other states. The discussion took place during a meeting of the Legislature’s Select Committee on capital Financing and Investments in CHEYENNE.

According to the Legislative Service Office, online wagering in Wyoming has totaled $629.7 million over the past five years, generating $3.8 million in tax revenue for the state. The current tax rate is 10% of online sports wagering revenue.

The first $300,000 of this revenue is allocated to the wyoming Department of Health for distribution to counties to address problem gambling, with the remainder deposited into the state’s general fund.

Online Sports Wagering tax Increase Proposed

Legislative Service Office associate fiscal analyst Karen Vaughn pointed out that the average tax rate on online sports wagering in other states is 19%. “I can tell you that none of the surrounding states are lower than 10%, or 10% or less,” Vaughn said.

Rep.Liz Storer, D-Jackson, proposed drafting a bill to raise the online sports wagering tax in Wyoming to 20%. Chairwoman Sen.Tara Nethercott, R-Cheyenne, clarified that this figure is a placeholder until the fiscal impact can be fully assessed.

“No doubt we’ll hear from folks from the online sports wagering industry,”

“No doubt we’ll hear from folks from the online sports wagering industry,” Nethercott said.

Skill-Based Amusement Games Tax Adjustment

The committee also considered a bill to increase the net proceeds tax on skill-based amusement games to 25%. Currently, 20% of net proceeds from thes games are distributed to local governments, cities, and the School Foundation Program (SFP), which supports public education. Since legalization in 2020, the SFP has received approximately $11.6 million from this source.

The proposed additional 5% would be earmarked for funding roads and highways.

Wyoming County Commissioners Association Executive Director Jerimiah Rieman stated, “Ther’s roughly a $500 million to a billion-dollar shortfall just on our paved roads in the state of Wyoming. So to the extent that you’re going to put it to highways, yes, I would request that you also consider the other local governments that have considerable road systems in this state.”

However, Jonathan Downing, a lobbyist for Cowboy Skill Games, LLC, cautioned that the 5% tax increase could negatively impact local Wyoming businesses, as these games are often located in bars, truck stops, and charitable organizations.

“Just to be clear, that type of increase would be borne by those locations that are mainly serving more Wyoming small businesses,” Downing said.

Pari-Mutuel wagering Tax discussions

Vaughn explained that pari-mutuel wagering is taxed based on the total handle. Live horse racing is taxed at 1.5% of the total handle (the total amount wagered), with the revenue going to the wyoming Gaming Commission.

Historic horse racing (HHR) machines are also taxed at 1.5% of the total handle, with 1% allocated to local governments, 0.25% to the Wyoming gaming Commission, and 0.25% to the state’s savings account,known as the Legislative Stabilization Reserve Account.

Rep. Bob Nicholas, R-Cheyenne, successfully proposed adding 1% more tax to HHR machines, with the funds directed toward highway funding.Sen. mike Gierau, D-Jackson, suggested extending this tax to all simulcast operations.

Nicholas estimated that the 1% tax would generate an additional $50 million for the state.

Wyoming Downs and 307 Horse Racing general counsel Traci Lacock opposed the tax increase, stating that the effective tax rate on her industry is actually 1.9%.

“There is a 1.5% tax that you were given the breakdown for,” Lacock said. “But in addition, we are required to pay 0.4% to the breeders Fund. … So your motion would effectively make it 2.9%.”

In 2024, three operators contributed $5.4 million to the state’s general fund and $5.3 million to the LSRA. Counties received just over $11 million, and cities received just over $10.1 million.

Lacock clarified that total handle is frequently enough mistaken for total revenue. As a notable example, if a person bets $1 and wins $3, and then wagers that $3, the total handle would be $4. Out of each dollar, 90 cents is returned to the pool, 1.9 cents goes to taxes, and operators retain 7.2 cents.

Operators use that 7.2% to cover property taxes, leases, employee wages, and other expenses, Lacock said.

“When you take our effective tax rate and you turn it into gross, we are being taxed at about 25 to 30% of our gross,” she said. “When you’re thinking about businesses in Wyoming, employees in Wyoming and the taxes we already pay. So I just would ask that you think about that as you think about a tax increase.”