Move to Eliminate U.S. Federal Betting Excise Tax Gaining Steam

It is very seldom that lawmakers in the U.S. agree on anything, but there is bipartisan support for eliminating a 0.25% federal betting excise tax on handle in participating American jurisdictions.

The U.S. House of Representatives has been chasing such a repeal for years, and news late last week broke with the Senate jumping on the repeal bandwagon.

Lawmaker support for repeal has been seen as hugely positive according to the American Gaming Association (AGA), which chimed in with its opinions on the matter following the news of a Senate’s Bill introduction.

If the repeal passes, companies providing gambling services, including our best sports betting sites, would be relieved of an archaic tax burden, and citizens would theoretically see the benefits of companies reinvesting in communities while further taking care of their clientele.

Background

The 0.25% excise tax on gambling activity has been around since 1951 and was created to clamp down on illegal gambling activity by non-licensed bookies that didn’t pay the tax.

The outdated plan also charges a $50 per person head tax for any employee working at a legal establishment. That head tax was an unforeseen penalty for legal outfits providing employment opportunities for local citizens.

In Nevada alone, the excise tax cost gambling providers an estimated $22 million in 2022,  money that could have been used to reinvest in the community, make odds more favorable, or improve best sportsbook promos. 

According to some lawmakers, funds from eliminating the excise tax could also boost local economies. 

The legislative push

Nevada’s Representative Dina Titus has been chasing a repeal for 10 years, introducing numerous bills. The latest from 2023 was in partnership with Rep. Guy Reschenthaler.

A Senate Bill proposed last week will attempt to see the excise tax eliminated for the benefit of consumers and gaming companies in the American market.

The Withdrawing Arduous Gaming Excise Rates (WAGER) Act was introduced by senators Catherine Cortez Masto and Cindy Hyde-Smith, piggybacking on a House Bill that came much earlier in the conversation.

Cortez Masto said of the Bill, “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. 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.”

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 American Gaming Association's reaction

The American Gaming Association (AGA) is understandably thrilled with the most recent efforts by federal lawmakers to ease the tax burden for betting providers across the country.

In a statement, AGA CEO and President Bill Miller said, “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.”

As for leveling the playing field with unregulated offshore gambling operators on U.S. soil, Miller went on to say,  “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.”