Connecticut iGaming Tax 2026: Rates and How It Works

The Connecticut iGaming tax charges online casino revenue at 18 percent through September 2026, then at least 20 percent after that. Online sports betting and fantasy contests carry a flat 13.75 percent rate. Both taxes fall on adjusted gross gaming revenue, not the raw amount an operator wins from players, and both are paid monthly. This guide sets out the current rates, the step-up ahead, who is responsible for paying under Connecticut’s tethered licensing model, and how the state taxes player winnings.

How the tax structure works today

The Connecticut iGaming tax applies at two rates, split by product. Connecticut currently taxes online casino revenue at 18 percent and applies a flat 13.75 percent rate to online sports betting and fantasy contests. Both figures apply to adjusted gross gaming revenue, the amount left after a capped promotional-credit deduction, not the amount a player actually loses. Because the base is adjusted rather than raw, the tax bill moves with reporting rules as much as with player activity.

The state built this into Connecticut General Statutes Chapter 229b, which covers licensing, tax rates and reporting for online casino, sports wagering, fantasy contests and keno. A holder of a Connecticut iGaming licence owes the tax on every dollar of adjusted revenue booked each month, regardless of the month’s net result.

Online casino, sports betting and fantasy tax rates

Connecticut sets a different rate for each product line rather than one flat charge across the market. The table below lists the current figures.

Sports betting and fantasy contests share the same 13.75 percent rate, and neither has a scheduled increase. Online casino sits higher and is the only product with a built-in step-up. So an operator running both casino and sports products carries two different effective rates on one platform.

The step-up from 18 percent to at least 20 percent

Public Act 21-23, the 2021 law that authorised online gaming in Connecticut, set the 18 percent online casino rate for a fixed five-year window. That window started when online casino went live in October 2021, so it closes in autumn 2026. After it closes, the rate rises to at least 20 percent of gross gaming revenue.

What the tax is charged on: adjusted gross gaming revenue

The Connecticut iGaming tax does not apply to the full amount a player loses. The state applies its rate to adjusted gross gaming revenue, the amount won minus a capped deduction for promotional credits issued to players. If an operator gives a player 100 USD in free-play credit and the player loses it, only part of that amount counts toward the taxable figure, up to the cap in place at the time.

That cap has tapered down since the market launched in 2021. The exact percentages and how they map to specific periods are covered in our Connecticut iGaming revenue figures guide. What matters here is that adjusted gross gaming revenue, not operator profit, is the base: marketing spend, platform costs, wages and content licensing fees play no role. The Connecticut online gaming rules set out how promotional credits must be tracked before they qualify.

Who is responsible for payment under the tethered model

Connecticut runs online casino through a tethered duopoly rather than an open licensing market. Only two federally recognised tribes hold master wagering licences for online casino: the Mashantucket Pequot Tribe, operating through DraftKings, and the Mohegan Tribe, operating through FanDuel. No standalone online casino licence exists for any other applicant.

The master wagering licensee, the tribal structure behind each tethered brand, is responsible to the state for the tax on its platform’s revenue. The tribe and its commercial operator set their revenue split through a private agreement. That arrangement does not change the amount owed to the state. The Connecticut Lottery Corporation holds a separate master licence covering sports betting, fantasy contests, keno and online lottery sales, but not online casino. The Connecticut DCP Gaming Division licenses and supervises all three master licensees. Each also pays 500,000 USD a year toward problem-gambling programmes, a fixed cost separate from the gaming tax.

How the tax is calculated and paid each month

Operators calculate and remit the Connecticut iGaming tax each month. The rate applies to that month’s adjusted gross gaming revenue. Marketing spend, platform fees, payment costs and wages do not reduce the taxable figure. As a result, a heavily promotional month can still generate a tax bill, even if the operator reports a loss.

A run of player wins can push a month’s revenue below zero. When that happens, the amount due is the greater of the calculated tax or zero, so a negative month produces no tax payment. How negative months show up in the reported totals sits with our Connecticut iGaming revenue coverage rather than here. Operators managing the monthly cycle across several states usually build structured monthly reconciliation into each filing.

Connecticut corporation business tax for operators

Beyond the gaming tax, a company operating in Connecticut is subject to the state’s corporation business tax. The standard rate is 7.5 percent of net income, with a 250 USD minimum tax that applies even to a company reporting no taxable income. A 10 percent surtax applies to businesses with 100 million USD or more in annual income, lifting the effective top rate to 8.25 percent; the surtax runs through 2028.

How Connecticut taxes player gambling winnings

Connecticut withholds 6.99 percent state income tax on gambling winnings when three conditions apply. The payer must do business in Connecticut, and the payment must trigger federal income tax withholding. The winner must also be a Connecticut resident or someone collecting on a resident’s behalf. Where those conditions apply, the operator withholds at source.

Winnings are also added to a resident’s Connecticut adjusted gross income. They are taxed at the state’s progressive rates, which top out at 6.99 percent. Unlike the federal rule, Connecticut does not allow residents to deduct gambling losses against winnings for state income tax purposes. This means a player cannot offset winnings with losses on a Connecticut return. Federal tax may also apply. Certain larger payouts are subject to 24 percent federal withholding, with Form W-2G issued above the federal reporting threshold. The Connecticut income tax treatment of gambling winnings publication from the Department of Revenue Services sets out the full rules.

What the Connecticut tax does not cover

The Connecticut iGaming tax reaches only play by people physically located in the state at the time they play. Geolocation checks enforce that boundary on every session, so a Connecticut master wagering licence and its tax do not extend to players in another state. An operator that wants to serve players elsewhere needs a separate licence and owes tax under that state’s own rate.

Operators comparing Connecticut against other US markets often look at the New Jersey iGaming market or the Michigan iGaming licence, since each state runs its own regulator, rate and reporting cycle. The gaming tax also sits apart from what it costs to enter the market. Licence and application fees are a separate line item, and the Connecticut iGaming licence cost guide covers those figures directly.

Planning around Connecticut’s online gaming tax

Our revenue reporting and audit team models the adjusted revenue base before an application goes in, and our gaming licensing compliance team runs the monthly filings once a licence is live. To pressure-test a Connecticut entry against these rates, contact DD Consultus at contact@licencegaming.com or +356 99408536 for a consultation.

Frequently asked questions

What is the tax rate on online casino play in Connecticut?

Connecticut taxes online casino gross gaming revenue at 18 percent through September 2026. After that, the rate rises to at least 20 percent under the schedule set in Public Act 21-23. Both figures apply to adjusted revenue after the promotional-credit deduction, not the raw amount won from players.

Does the Connecticut iGaming tax increase after 2026?

Yes. The 18 percent online casino rate was set for a five-year window starting when the market launched in October 2021, so it closes in autumn 2026. From October 2026 onward, the rate steps up to at least 20 percent. Sports betting and fantasy contests keep their flat 13.75 percent rate with no scheduled change.

How is the Connecticut iGaming tax calculated?

The tax applies to adjusted gross gaming revenue, calculated and paid monthly rather than annually. Operating costs such as marketing, platform fees and wages do not reduce the taxable figure. The Connecticut Department of Consumer Protection, Gaming Division, oversees the reporting behind each monthly payment.

Who pays the online casino tax in Connecticut?

The master wagering licensee, the tribal structure behind each tethered brand, is responsible to the state for the tax. The Mashantucket Pequot Tribe operates through DraftKings and the Mohegan Tribe operates through FanDuel, and each settles its own revenue split with its commercial partner privately. That private split does not affect the amount owed to the state.

Are promotional credits deducted before the Connecticut tax?

Yes. The tax applies to adjusted gross gaming revenue, which subtracts a capped share of promotional credits from the amount won. The cap has changed over time since the 2021 launch, and the exact schedule sits in our Connecticut iGaming revenue coverage rather than in this guide.

Do players pay tax on gambling winnings in Connecticut?

In most cases, yes. Connecticut withholds 6.99 percent state income tax on winnings when the payer does business in Connecticut, the payment triggers federal withholding, and the winner is a Connecticut resident. Winnings are also added to the player’s Connecticut adjusted gross income and taxed at the state’s progressive rates.

Can Connecticut players deduct gambling losses?

No, not for state purposes. Connecticut does not allow residents to deduct gambling losses against winnings on a state income tax return, even though federal rules allow a loss deduction for itemising filers. A player’s full winnings amount is taxed at the state level regardless of losses incurred elsewhere.

Does the Connecticut tax apply to players in other states?

No. The tax reaches only play by people physically located in Connecticut, verified through geolocation on every session. An operator serving players in another state, such as New Jersey or Michigan, needs a separate licence there and pays tax under that state’s own rate.