Let’s be real: 2025 was supposed to be the year sports betting kept growing. Instead, governments around the world spent twelve months evaluating ways to increase tax revenues from licensed operators already in the game – and payment gateways and payment service providers are directly impacted by these changes.
The Global Tax Hammer
Here’s what happened. From Washington to Berlin to New Delhi, lawmakers looked at their budgets and identified fiscal gaps, and decided the sector has become a focus for additional fiscal measures. The result is a fragmented but universally painful landscape of tax hikes that are reshaping the industry’s financial plumbing.
In the United States, regulatory and fiscal pressure continues to increase.
In 2025, Illinois implemented a tiered tax system ranging from 20% to 40%, along with an additional per-bet tax of $0.25–$0.50, significantly raising the cost for sportsbook operators.
Maryland increased its rate from 15% to 20%.
States such as New Jersey and Louisiana have already enacted tax increases as governments seek additional revenue from the growing betting market.
Even Ohio, which already doubled its tax rate from 10% to 20% in 2023, faces ongoing discussions about further increases.
But this isn’t just an American story
In Europe, traditional hubs and major markets are increasing regulatory and tax requirements. Germany’s State Treaty on Gambling, with its 5.3% tax on betting stakes (turnover), continues to put pressure on operator margins, pushing operators to optimize every cost, including payment processing.
Portugal maintains one of the most demanding tax regimes in Europe, with a 25% tax on GGR for casino games and a turnover-based tax on sports betting, creating a challenging environment
for operators and their payment partners. Even Malta and Cyprus, long considered industry havens, are under pressure from EU regulators to tighten oversight, indirectly increasing compliance costs.
In Asia, the picture is mixed but equally challenging for payment providers. India’s complex tax landscape remains a significant hurdle. The country maintains restrictions on online gambling, and the tax rate for land-based casinos has increased from 28% to 40%, creating compliance challenges for operators and the payment gateways serving the broader gaming sector. Indonesia maintains a total ban on online gambling, while authorities are increasing enforcement against unregulated operators, which is pushing payment flows into unregulated channels.
For operators everywhere, this math hits differently when margins are already thin. And when operators get squeezed, the first thing they look at is payment costs.
The Global Tax Landscape at a Glance
To understand the pressure, look at the numbers. Here’s how major jurisdictions stack up:
| Region | Key Tax Rate (Sports Betting) | Notes |
|---|---|---|
| Portugal | Games of chance and gambling (online casinos, poker): 25% of gross revenue (GGR – the difference between the amount wagered and the winnings paid out). Sports betting and horse racing: 8% of total betting turnover. | One of Europe’s tougher tax regimes for online sports betting. |
| Cyprus | ~13% on GGR. 10% – direct tax on net revenue. 3% – social responsibility contribution (2% to the National Rates Authority and 1% to the National Addiction Program). | Regulated sports betting market with additional contributions to responsible gambling funds. |
| Malta | Variable gaming tax structure | Traditional licensing hub facing increasing EU scrutiny and compliance requirements. |
| India | Online gambling is banned in the country, and the tax rate for land-based casinos has increased from 28% to 40%. | Significant restrictions and a complex tax structure (including a high GST on turnover) create a challenging environment. Tax rates for land-based casinos have reportedly increased, adding to the compliance burden. |
| Brazil | Since January 1, 2025, the tax rate has been 12% of the gross gambling income (GGR) (total bets minus winnings paid out). Beginning in 2026, a gradual increase in this rate began. According to the approved amendments, the online casino tax could increase by 50% from the current level. | In addition, the company pays corporate income tax (IRPJ), social security contributions (CSLL), and turnover taxes (PIS/COFINS). As a result, the overall tax burden is one of the highest in the world. |
| USA (Maryland) | 20% on GGR | Examples of rising state-level taxes post-legalization. |
| USA (Ohio) | 20% on GGR | Rate doubled from 10% in 2023, with discussions of further hikes.c |
Where Payment Providers Feel the Pinch
Higher taxes mean operators run tighter ships. They renegotiate every contract. They push for lower processing fees. They delay settlements where they can. And they start caring a whole lot more about transaction failures.
Because here’s the thing no one talks about: every declined deposit isn’t just a lost bet – it’s a player who might go find another site. When margins shrink, retention matters more. Payment gateways that can’t deliver fast, reliable transactions become liabilities fast.
The compliance side got messier too. In the US, states cracking down on unregulated sweepstakes casinos sent a clear message: regulators are watching payment flows. In Europe, the evolving EU anti-money-laundering framework, including the upcoming EU Anti-Money Laundering Authority (AMLA). The broader AML regulatory package is also forcing payment providers to implement even stricter due diligence, monitoring, and reporting. In Asia, navigating the ban in Indonesia or the GST chaos in India requires specialized local knowledge and complex processing expertise – all of which costs money.
The Expansion That Wasn’t
Here’s the part that stings for payment companies banking on growth: legalization in major new markets basically stalled.
In the US, Minnesota had momentum, then collapsed. Georgia couldn’t get anything through. Even Texas, with its massive population and huge sports culture, remains politically complicated – a prize that stays just out of reach.
Globally, the story is similar. Hopes for major new markets such as Brazil have moved forward with legalization but come with complex regulatory and tax structures, while markets like Japan remain highly restricted.
That leaves payment providers vying for share in the same established markets, the same operators, the same shrinking margins. No new markets means no new integration deals, no new processing volume, no easy growth.
What Actually Works Now
The operators surviving this squeeze share one thing: they’ve figured out that payment experience keeps players around. Faster withdrawals matter more when bonuses all look the same. Fewer declines matter more when every player counts.
For payment gateways, that means faster payment processing and quicker withdrawals aren’t nice-to-haves anymore. Real-time fraud detection isn’t optional. Being able to handle high-volume payouts without hiccups? That’s table stakes.
The providers winning right now are the ones helping operators reduce costs without breaking the player experience. Lower fees, yes – but also fewer false declines, smarter retry logic, cleaner reconciliation, and deep expertise in navigating specific regional tax and regulatory landscapes, whether that’s Germany’s turnover tax, India’s GST, or the compliance demands of AMLA in Europe.
The Bottom Line
Sports betting payment processing used to be about capturing growth. Now, in 2026, it’s about surviving margin compression while regulators and tax authorities watch closer than ever. This isn’t just a US problem; it’s a global reality.
Operators need payment partners who understand that math on a global scale. Lower costs, better uptime, fewer headaches, and the ability to adapt to the chaotic tax and regulatory environments of key markets like Germany, Portugal, and India. The ones delivering that will stick around. The ones still selling the “growth story” while taxes climb and expansion stalls? They’re going to have a rough couple years.
Payment gateways aren’t just processing transactions anymore. They’re part of how operators manage risk in an industry where every percentage point matters, in every country where they operate.
