US Senators Catherine Cortez Masto (D-NV) and Cindy Hyde-Smith (R-MS) have introduced a bill to end the federal excise tax on sports betting.
The US Senators argue that the antiquated federal excise tax on sports betting only serves to put legal operators at a disadvantage versus unlicensed sportsbooks that do not pay taxes.
The federal excise tax on sports betting is a 0.25 tax on handle that was established in 1951, alongside a $50 per head annual sportsbook employee tax.
The Senators’ Withdrawing Arduous Gaming Excise Rates (WAGER) Act, introduced Wednesday (July 31), would exempt legal sportsbooks from these taxes, enabling state’s to “reinvest their gaming revenues into their local economies”.
Similar legislation has previously been introduced in the US House of Representatives and Senate in multiple years.
“Nevada is home to multiple championship-level sports teams, and we know better than anyone that responsible, legal sports betting can be a great revenue source for our local economy,” said Senator Cortez Masto.
“My bipartisan legislation will ensure our sports gaming industry can provide essential tax relief to consumers and our sports gaming industry, creating more jobs and keeping our tax money in the state while cracking down on illegal activities.”
Senator Hyde-Smith added: “Mississippi has a strong tourism industry thanks, in part, to our beautiful casinos and resorts that make valuable contributions to local communities. They could do more if not for this outdated federal excise tax on sports betting that only benefits illegal offshore operations which provide zero jobs or tax revenue.
“By repealing this tax, our bipartisan WAGER Act will level the playing field, boost local economies, and ensure that gaming revenues stay here, supporting jobs and community investments.”
The WAGER Act has the support of the American Gaming Association, which has long campaigned for the tax to be abolished.
“The federal sports betting excise tax was enacted more than 70 years ago as a tool to prosecute illegal sports betting operators,” said AGA president and chief executive Bill Miller. “Today, with sports betting legal in 38 states and Washington, D.C., this antiquated tax puts legal operators at a competitive disadvantage and rewards illegal offshore bookmakers that pay no federal or state taxes, offer no responsible gaming tools, and have no systems in place to prevent underage customers from using their platforms.
“The AGA is grateful to Senators Cortez Masto and Hyde-Smith for their commitment to providing a safe, responsible sports betting market and to continuing to help migrate bettors out of the illegal market, which is bereft of consumer protections and a haven for bad actors and tax evaders. The AGA will continue to work with policymakers to enact legislation to address this harmful tax.”
At the start of this year, Senator Richard Blumenthal of Connecticut and Representative Andrea Salinas of Oregon also proposed legislation concerning the federal sports betting tax. Rather than eliminate the tax, their proposal seeks to divert that revenue to support gambling addiction research and treatment.
The authors of the Gambling addiction Recovery, Investment, and Treatment (GRIT) Act note a 186 per cent increase in revenue from the federal sports betting tax between FY20 and FY21 to $110.7 million, while the National Council on Problem Gambling estimates the FY23 tax revenue to be in the region of $250 million.