As tax pressure on sports betting continues to intensify worldwide, sportsbooks are being forced to rethink their business strategies to protect their margins while remaining competitive in increasingly regulated markets.

In recent years, the industry has entered a new phase defined by stricter tax frameworks. In the United States, states such as Illinois have implemented per-bet taxes on online sportsbooks, while the UK has introduced a new 25% General Betting Duty for digital wagering. Meanwhile, rapidly developing Latin American markets, including Brazil, are moving toward more robust taxation models, signalling that higher operational costs are set to become a permanent feature of the industry.

When taxes rise, operators rarely “absorb” the cost. The instinctive reaction across the industry is to pass the cost on to the customer in one of several ways — each with potential long-term drawbacks.

Some operators raise the overround on popular markets, others cut promotions, tighten loyalty programmes or reduce marketing spend. In more extreme cases, high-tax environments accelerate market consolidation as smaller operators struggle to compete with brands that have greater scale and operational efficiency.

At the same time, certain product types — particularly bet builders/same‑game parlays — continue to rise in popularity. These products naturally carry higher margins, giving operators an important buffer when other areas of the sportsbook become more expensive to run. The ongoing growth of bet builders not only helps sustain profitability but also influences where and how operators can adjust their pricing strategies.

The challenge, then, is to find a balance: protect margin under rising tax pressure while continuing to offer competitive pricing and a compelling customer proposition.

Key challenges faced by operators in a high‑tax environment

As taxes rise, operators typically lean on the fastest levers available to recover value, but those levers impact the user experience. Increasing theoretical hold is the most direct route, yet becomes highly visible to price‑sensitive bettors — particularly in mature, competitive markets. Even small odds shifts influence bettor behaviour, pushing them toward operators with sharper pricing or toward offshore competitors who face no tax burden and can therefore maintain lower margins.

Promotional reductions create similar challenges. When bonuses become smaller or less frequent, acquisition becomes harder and more expensive, while pulling back on marketing can damage brand presence and slow growth. Add to this the operational impact of taxes applied per wager or as a share of revenue, and inefficiencies across trading, pricing and risk management become far more expensive.

All of this is compounded by the fact that price sensitivity varies dramatically depending on both the market being operated in and the sportsbook’s strategic positioning. Some markets — such as the UK or mature US states — have extremely price-aware bettors. Others, particularly newer regulated markets, show more varied sensitivity depending on demographic, product usage and local betting culture. Sportsbooks that understand these nuances gain a significant strategic advantage.

The long-term risk is reputational. Once a sportsbook becomes known for ‘poor value,’ customers can be slow to return even if prices later improve.

Protecting margins without sacrificing competitiveness

The operators who succeed in high-tax environments are often those who avoid blunt uniform margin increases and instead take a targeted, intelligent and technology-enhanced approach.

Selective margin allocation is one such strategy. By keeping headline markets — top leagues, outrights, primary handicaps — sharp, operators can maintain competitiveness where scrutiny is highest. Margin can instead be recovered in long‑tail markets, niche sports or low‑visibility props. This approach becomes even more effective when paired with the rising popularity of bet builders/SGPs, which naturally offer higher contribution margins.

For Kambi, AI-powered pricing and trading is crucial as it enables our sportsbook to offer an improved offering, trading efficiency and pricing accuracy across the entire sportsbook offering. Automation minimises manual error, speeds up bet offer creation and ensures consistency across thousands of markets, expanding the operator’s ability to keep odds sharp and at a price that reflects the potential outcome’s true probability.

Confidence in pricing is another critical factor. Operators with incomplete models often compensate by adding unnecessary margin padding. With sophisticated, data‑driven models, sportsbooks can price more accurately and reduce the need to widen spreads, thus protecting both competitiveness and profitability.

Finally, real-time data is indispensable. Understanding which customers are price-sensitive, what competitive pricing looks like in each region and how different customer groups respond to promotions allows operators to tailor their pricing strategy. The result is a differentiated margin strategy that aligns with both customer behaviour and market conditions.

Smarter trading and stronger margins with Kambi

Kambi’s suite of premium sports betting solutions offers operators the quality, flexibility and control needed to perform strongly even as external costs rise. Unlike many B2B suppliers who rely heavily on third‑party data feeds, Kambi conducts all its trading fully in‑house. This vertical integration gives operators a level of pricing accuracy, responsiveness and strategic control that feed‑reliant providers simply cannot match. It also means Kambi can use trading itself as a strategic lever — adapting margin profiles, shaping market depth and sharpening prices with far greater precision. For operators navigating higher taxes, this capability becomes a powerful competitive advantage.

Turnkey Sportsbook provides an end-to-end sportsbook solution with a market-leading Bet Builder and advanced trading, risk management and pricing capabilities, combined with our price differentiation tool and bespoke risk management strategies. This allows operators to alter the odds offered either by adjusting the overall margin or moving the odds on a single selection, all of which can be tailored to a specific geographic region.

Odds Feed+ is designed for operators with proprietary sportsbook technology. It is a single‑API odds solution that delivers high‑quality pre‑match, live, micro, and player‑props markets — sharpened by billions of bets and millions of players from Kambi’s global sports betting network — to provide accurate and trusted odds tailored to enhance any sportsbook and drive profitability and engagement.

Together, these capabilities give operators the flexibility needed to navigate rising tax pressures while maintaining strong competitiveness.

Conclusion

Higher taxation is redefining the economics of regulated sports betting across global markets, but it does not need to undermine competitiveness. With selective margin allocation, automated trading, advanced pricing models and real-time player behavioural insights, operators can maintain margins without impacting the user experience. Meanwhile, the growing popularity of bet builders provides a high-margin product category that can help offset tax-driven pressures.

Kambi’s Turnkey Sportsbook and Odds Feed+ empower operators to strike this balance, offering the tools, expertise and flexibility required to remain profitable and competitive in a high‑tax environment.