U.S. Senate Aims to Repeal Outdated Federal Gambling Tax

In a bipartisan move, U.S. lawmakers are vigorously working to repeal the federal excise tax on sports betting handle, which currently stands at 0.25%. Representative Dina Titus of Nevada, who has been a long-time advocate for the repeal, is co-sponsoring a House bill with Representative Guy Reschenthaler. Mirroring this, Senators Catherine Cortez Masto and Cindy Hyde-Smith have introduced a similar proposal in the Senate, termed the Withdrawing Arduous Gaming Excise Rates (WAGER) Act [pdf].

Bipartisan for the WAGER Act

The Senate’s version of the bill, spearheaded by Senators Cortez Masto and Hyde-Smith, aligns closely with the House’s proposition. Senator Cortez Masto emphasized the significant benefits that the legal sports betting industry brings to Nevada, especially with the state hosting numerous championship-level sports teams. “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,” she stated.

Echoing these sentiments, Senator Hyde-Smith highlighted the positive impact that repealing the tax could have on Mississippi‘s tourism and casino sectors, stating, “They could do more if not for this outdated federal excise tax on sports betting that only benefits illegal offshore operations which provide zero jobs or tax revenue.”

Industry and Legal Experts Rally Behind the Repeal

The American Gaming Association (AGA) has expressed strong for the WAGER Act. AGA CEO and President Bill Miller praised the bill for aiming to create a safer and more responsible betting environment and for its potential to draw bettors away from the unregulated market. “The AGA will continue to work with policymakers to enact legislation to address this harmful tax,” Miller remarked.

However, the journey toward repealing the tax is not without its challenges. The introduction of the Gambling Addiction Recovery, Investment, and Treatment (GRIT) Act by Senator Richard Blumenthal and Representative Andrea Salinas proposes maintaining the excise tax but reallocating the funds to gambling addiction treatment and research.

A Competing Vision: The GRIT Act

The GRIT Act represents a divergent approach to the use of the excise tax, advocating for the allocation of 50% of the tax revenues to combat gambling addiction at the federal level. This stands in contrast to the suggestion by most states, which typically allocate their own portions of gambling revenues to such initiatives, arguing that gambling is predominantly a state-regulated issue.

Potential Impacts of Repealing the Tax

Repealing the federal excise tax could significantly lessen the financial burden on legal betting operators, making the legal market more competitive against illicit operators who evade these taxes. According to industry experts, the tax is seen as an outdated measure that unfairly penalizes regulated entities while inadvertently ing illegal betting operations.

Furthermore, the tax imposes a $50 per employee head tax on gambling operators, adding to the operational costs of legal betting companies. Eliminating these taxes could help stimulate more robust growth in the industry, encouraging job creation and greater tax revenue retention within the states.

Source:

Bill to repeal US gambling excise tax filed, igamingbusiness.com, July 31, 2024.