KEY TAKEAWAYS
CONTENTS
Online casino gaming is licensed and taxed by individual states, not by a single federal framework, and the rules differ sharply. As of October 2026, state statutes set the operator tax rate at figures that range from 15% of adjusted gross interactive wagering receipts in West Virginia and 19.75% of internet gaming gross revenue in New Jersey to 54% on online slot machines in Pennsylvania. Licensing follows one of three patterns: licenses tied to existing casinos, licenses reserved for Native American tribes, or games run by a state lottery.
This article explains those models and compares what the statutes of eight states say, with each rate dated and sourced. It is a description of the law in general terms. The taxes discussed are imposed on operators, and nothing here applies the law to any individual or tells a reader what to do. The list of states that currently allow online casinos is covered in which states have legal online casinos.
Why States Set Their Own Online Casino Rules
No single statute creates a national online casino market. Each authorization is a state law, and the statutes examined here include New Jersey’s P.L. 2013, c.27 on Internet gaming, Pennsylvania’s Act 42 of 2017, Michigan’s Lawful Internet Gaming Act (Public Act 152 of 2019), West Virginia’s Lottery Interactive Wagering Act, Connecticut’s Public Act 21-23, Rhode Island’s 2023 lottery amendments, Delaware’s internet lottery provisions and Maine’s Public Law 2025, chapter 538.
Because each legislature wrote its own bill, the policy choices differ: who may hold a license, how many licenses exist, what the state collects, and where the money goes. Some statutes name the beneficiary of the revenue in detail. Michigan, for example, directs money left in its Internet Gaming Fund to the state school aid fund after other listed expenditures, according to the 2026 amendment discussed below.
A second reason for variation is the starting point. Pennsylvania’s Act 42, signed on October 30, 2017, authorized online gaming alongside other expansion measures, while Connecticut’s act depends on amendments to compacts and memoranda of understanding with two tribes. The origin of each law shapes its structure, which is why a rate that looks similar on paper can mean different things in different states.
The Three Licensing Models
Casino-tethered licenses
In several states, only existing land-based casino licensees can obtain an online license. West Virginia allows up to five licenses, and an applicant must hold a racetrack video lottery license or a license for the historic resort hotel casino. Under the act as enacted in 2019, the application fee is $250,000 for a five-year license, with a $100,000 renewal fee.
Pennsylvania uses certificates tied to its casinos. Act 42 permits 13 certificates for each of three categories, peer-to-peer poker, table-game simulations and slot simulations, for 39 in total. The Pennsylvania Gaming Control Board announced in 2018 that existing casinos could first petition for all three categories for a $10 million authorization fee, then for individual categories at $4 million each, and the American Gaming Association’s 2025 fact sheet reports a separate $1 million license for platform operators.
Michigan’s act allows Detroit’s three commercial casinos and the state’s 12 tribal casinos to conduct internet gaming, according to the Michigan Senate Fiscal Agency. New Jersey’s regulations likewise compute the tax on sums received by a casino licensee from Internet gaming operations, which reflects a casino-linked structure.
Tribal-exclusive licenses
Connecticut’s Public Act 21-23 allows its commissioner to issue a master wagering license to the Mashantucket Pequot Tribe and another to the Mohegan Tribe, and each license permits one online casino skin. Maine’s law goes further by limiting licenses to federally recognized tribes in the state. Michigan’s act also covers tribal operators, who make payments under section 7(1)(f) rather than paying the section 14 tax, and its license conditions for them include continuing to operate a Class III casino. According to Fox Rothschild, each eligible Maine tribe may hold one license. The role of tribal regulators is explained in what the National Indian Gaming Commission does.
State-lottery control
In Rhode Island and Delaware, the games belong to the state lottery rather than to a licensed private operator. Rhode Island’s statutes allocate online slot and table gaming revenue among the state, a platform vendor, a game vendor and two towns. Delaware’s internet video lottery and internet table games run through websites of its video lottery agents, under the Delaware Lottery’s rules, according to Title 29, chapter 48 of the Delaware Code.
How Online Casino Tax Rates Compare
The table below summarizes what each state’s statute or regulator says about the state’s share, as of October 2026. Rates are not directly comparable, because states define the taxable base differently and some, such as Rhode Island, use revenue allocation instead of a tax.
| State | Model | What the source reports |
|---|---|---|
| New Jersey | Casino-tethered | 19.75% of internet gaming gross revenue since July 1, 2025 |
| Pennsylvania | Casino-tethered | 54% listed for online slots; 16% listed for table games |
| Michigan | Casino and tribal | Graduated 20% to 28% of adjusted gross receipts |
| West Virginia | Casino-tethered | 15% of adjusted gross interactive wagering receipts |
| Connecticut | Tribal | 18% of gross gaming revenue in the first five years, 20% after |
| Rhode Island | State lottery | State share of 61% of online slot revenue and 15.5% of online table revenue |
| Delaware | State lottery | Table games follow a 15.5% state share and 4.5% for purses, after the first $3.75 million each fiscal year |
| Maine | Tribal | 18% of adjusted gross receipts (enacted; not launched) |
The base matters as much as the rate. Connecticut’s statute excludes some promotional credits from gross gaming revenue but counts the excess above monthly caps of 25%, 20% and 15% of revenue in the first, second and later years. Michigan taxes adjusted gross receipts, and New Jersey taxes gross revenue, so a quoted percentage cannot be compared without checking each definition.
Pennsylvania’s figures come from the Gaming Control Board’s tax-rate listing, and the association’s fact sheet describes 16% on online table games and peer-to-peer poker. For operator taxes on sports wagering, which follow different rules, see how operators are taxed on sports betting.
How the Rules Work in Practice
Licensing statutes attach conditions to the license. Michigan’s section 7 conditions for tribal operators, for example, require responsible gaming measures, technical standards for platforms, verification that players are 21 or older and located in the state, and timely payments under a graduated schedule. West Virginia requires players to be at least 21, and it allows wagers from other states only where the commission has an interactive wagering agreement.
Payment schedules differ as well. Michigan operators pay monthly, by the tenth day of the following month. West Virginia licensees file weekly returns and remit by the Wednesday after each week, and Connecticut licensees pay by the fifteenth of each month. The statutes set these schedules without explaining the choice.
Consider a hypothetical: suppose two states each announce a 20% rate. One could tax adjusted receipts and the other gross revenue, and one could limit promotional deductions while the other does not. The same headline number would then produce different payments for an operator, which is why the sections of each statute defining the base deserve as much attention as the rate itself.
Some statutes also add local payments. Michigan’s section 14(5) provides that, where a city imposes a 1.25% municipal services fee on a casino licensee, the city may charge the same 1.25% on the adjusted gross receipts of an internet gaming operator whose casino is in that city.
What Is Changing and What Remains Open
Several rules have moved recently. New Jersey enacted a higher rate in P.L. 2025, c.66, approved June 30, 2025 and effective July 1, 2025, which raised the internet gaming tax from 15% to 19.75%. The Division of Gaming Enforcement reports that the 15% rate applied from November 2013 through June 30, 2025.
In Michigan, Public Act 93 of 2026, approved September 21, 2026 and effective immediately, amended sections 14 and 16 of the Lawful Internet Gaming Act. The enrolled text restates the same 20% to 28% schedule and sets out how the Internet Gaming Fund is spent, including $3 million a year to the compulsive gaming prevention fund.
West Virginia shows a proposal that did not advance. House Bill 4397, introduced on January 16, 2026, would have raised the rate from 15% to 25%, but the legislature’s bill history shows no action after referral to committees, so the 15% rate remains in force as of October 2026.
Maine’s law became law without the governor’s signature on January 11, 2026, with an 18% tax and tribal-only licensing. The market had not launched as of October 22, 2026, when The Lines reported that the Gambling Control Unit was in a third round of publishing proposed rules and that further revisions could push a launch past the first quarter of 2027. The unlicensed sweepstakes debate is separate and is covered in are sweepstakes casinos legal.
Common Misconceptions About iGaming Rules
One misconception is that a higher headline rate means a higher burden. As the Connecticut and Michigan examples show, the definition of revenue and the treatment of promotional credits change what the rate is applied to, so rates alone are an incomplete comparison.
A second is that a license from one state works everywhere. Statutes generally tie wagering to the state: Michigan’s section 7 conditions limit internet wagering to participants located in the state, with an exception for poker where the board authorizes multijurisdictional play, and West Virginia requires an agreement before accepting wagers from other jurisdictions. Interstate poker compacts are covered in how the Multi-State Internet Gaming Agreement works.
A third is that the taxes described here are charges on players. The statutes cited impose them on licensed operators, licensees or master wagering licensees, so the legal taxpayer is the operator. How any individual’s own winnings are treated is a different question, which this article does not address.
What This Means for Readers
For readers following online casino law, the primary sources are the state statutes and the regulator’s own publications: the New Jersey Division of Gaming Enforcement, the Pennsylvania Gaming Control Board, the Michigan Gaming Control Board, the West Virginia Lottery Commission, the Connecticut Department of Consumer Protection, the Delaware Lottery and the Maine Gambling Control Unit.
Rates and license counts change by legislation, and the dates in this article reflect the position verified in October 2026. A general method for checking an operator against a regulator’s records is described in how to check if an online sportsbook is licensed. Anyone with a question about a personal situation should consult a licensed attorney in the relevant state.
Related Laws and Next Reading
Readers who want the list of states that currently authorize online casinos can start with which states have legal online casinos. The legal debate over sweepstakes casinos, the sports betting counterpart to this tax comparison, the interstate poker compact and the work of tribal regulators are each covered in the USGamingLaw articles linked earlier. Together they show how states divide the same activity into different legal structures, and why the statute of each state, with its date, is the reliable starting point.
Frequently Asked Questions
Legal disclaimer: This article is for general informational purposes only and is not legal advice. Gambling laws vary by jurisdiction and change frequently; the information above reflects our research as of October 2026. For advice about your own situation, consult a licensed attorney in your state and check the official sources of your state’s gaming regulator.
Sources & References
- New Jersey Legislature — P.L. 2025, c.66 (A5803), Internet gambling taxes (approved June 30, 2025)
- New Jersey Division of Gaming Enforcement — Gaming and Atlantic City Specific Taxes and Fees, 2025
- Michigan Legislature — MCL 432.314, Graduated tax; exception (Lawful Internet Gaming Act)
- Michigan Legislature — MCL 432.307, Internet gaming operator license conditions
- Michigan Legislature — Public Act 93 of 2026 (Enrolled House Bill 6127)
- Pennsylvania Gaming Control Board — Benefits for Pennsylvanians (tax rates)
- Pennsylvania Gaming Control Board — Interactive gaming petitions press release (March 14, 2018)
- Pennsylvania General Assembly — Act 42 of 2017 (October 30, 2017)
- American Gaming Association (industry association) — Pennsylvania Gaming Regulatory Fact Sheet, 2025
- West Virginia Legislature — W. Va. Code § 29-22E-16, Interactive wagering revenues
- West Virginia Legislature — HB 2934 (2019), West Virginia Lottery Interactive Wagering Act
- West Virginia Legislature — House Bill 4397 (2026) bill history
- Connecticut General Assembly — Public Act 21-23
- Rhode Island General Assembly — R.I. Gen. Laws § 42-61.2-5.1, Allocation of online slot gaming revenue
- Rhode Island General Assembly — R.I. Gen. Laws § 42-61.2-5.2, Allocation of online table gaming revenue
- Delaware General Assembly — 29 Del. C. ch. 48, subch. I (State Lottery)
- Maine Legislature — Summary of Public Law 2025, chapter 538 (LD 1164)
- Maine Legislature — LD 1164 text and status
- Michigan Senate Fiscal Agency — OneFAB, Internet Gaming (September 1, 2025)
- New Jersey Division of Gaming Enforcement — N.J.A.C. 13:69L, Taxes (Internet gaming gross revenue tax)
- Fox Rothschild — Maine opens door to tribal internet gaming (January 14, 2026)
- The Lines — Maine online casinos launch risks delay (October 22, 2026)
- American Gaming Association (industry association) — Connecticut Regulatory Factsheet, 2026
