The 51% Sportsbook Tax
Rhode Island has one of the most punishing operator tax structures in legal US sports betting. The 51% headline rate is only part of the story — when you add the 17% facility fee paid to Bally’s, the actual sportsbook keeps just 32% of revenue. This is why Sportsbook RI is what it is.
The 51% / 17% / 32% split
For every $100 of gross gaming revenue (GGR — money kept by the sportsbook after paying out winners), the split is:
- $51 to the State of Rhode Island (RI Lottery → general fund + education + problem gambling)
- $17 to Bally’s Corporation as the host facility fee
- $32 to IGT as the platform operator
That 32% has to cover technology, customer service, marketing, KYC/AML compliance, payment processing, and any operating profit. The math is brutal.
How RI compares to other states
| State | Tax Rate | Model |
|---|---|---|
| Rhode Island | 51% GGR | State monopoly |
| New Hampshire | 51% GGR | Single operator (DK) |
| New York | 51% GGR | 9 operators |
| Oregon | 51% GGR | State monopoly (DK) |
| Massachusetts | 20% GGR | 7 operators |
| Connecticut | 13.75% GGR | 3 operators |
| New Jersey | 13% GGR | 20+ operators |
| Nevada | 6.75% GGR | Many operators |
RI’s effective rate for the operator (factoring in the Bally’s 17%) is the worst in the country.
Where the tax money goes
The 51% the state takes flows through the Rhode Island Lottery’s revenue distribution:
- General fund — the bulk. Funds education, public safety, healthcare, transportation.
- Problem gambling programs — a small percentage carved out for treatment and awareness.
- Lottery operating costs — the RI Lottery itself.
Sports betting tax has contributed roughly $110M cumulatively since 2018, plus an additional ~$14.4M from iGaming in its first 11 months (Mar 2024–Feb 2025).
Why the rate is so high
Two reasons:
- Monopoly leverage. When there is only one operator (and the state itself runs the program), you don’t have to attract competitive bidders. RI set the rate high because it could.
- Host fee bundling. Bally’s accepts the 51% rate because it also gets 17% as the facility — combined, that’s a deal Bally’s tolerates. A new entrant without facility-fee revenue could not operate profitably at 51%.
What it means for the app
The 32% operator share is the direct reason Sportsbook RI’s app is built on legacy IGT/William Hill technology and not updated as frequently as DraftKings or FanDuel. There simply isn’t enough margin to fund a competitive product team. The 2025 Spectrum Gaming Group report explicitly flagged this as the reason RI’s handle has stagnated at ~$400M annually while neighboring Massachusetts pulls multiples of that.
The 2026 tax question
The biggest open question in SB 748 is whether the new license-holders will operate under the same 51% rate. Almost certainly not — no commercial operator would pay $5–10M for a license to operate at a guaranteed loss. Industry analysts expect:
- New operators taxed at 20–25% (in line with MA)
- Bally’s retains its higher-margin grandfathered position OR transitions to the new rate
- State revenue dips short-term but is more than offset by the larger competitive market
If the new rate lands at 20%, RI bettors will get DraftKings/FanDuel-quality apps for the first time. If it stays at 51%, the expansion fails before it starts.
iGaming taxes (for comparison)
Online casino taxes in RI tell a similar story:
- Slots: 61% of GGR
- Table games: 15.5% of GGR
The slot rate is the second-highest in the US (only Pennsylvania is higher at 54% on slot revenue). The lower table-game rate exists because table games have lower margins and skilled players limit operator hold.