AGA Supports Repeal Of Federal Sports Betting Excise Tax
The American Gaming Association has endorsed a bill to repeal the federal sports betting excise tax on legal sportsbooks. Sen. Catherine Cortez Masto (D-NV) and Sen. Cindy Hyde-Smith (R-MS) are backing the bipartisan measure. If signed into law, this would be the first major sports betting shift at the federal level since the repeal of PASPA in 2018.
AGA Announces Support To Repeal Federal Sports Betting Tax Excise
The bill named the Withdrawing Arduous Gaming Excise Rates (WAGER) Act was introduced in Congress Wednesday. Bill sponsor Sen. Cortez Masto describes the bill as an effort to protect legal sportsbooks and gaming businesses. The measure also aims to protect Tribal communities by reinvesting the revenues into their local economies.
The WAGER Act would exempt regulated sports betting sites and retail operators from federal taxation on wagering handle. Currently, all sports betting operators see a 0.25% federal tax on any legal wager. Operators also pay an additional $50 annual tax per employee.
“The federal sports betting excise tax was enacted more than 70 years ago as a tool to prosecute illegal sports betting operators. 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.”
Bill Miller, CEO of AGA, in the official statement
Bill supporters believe that repealing the measure will result in more sports betting funds being spent on improving communities. Additionally, since illegal offshore books do not pay taxes to begin with, they are the only operators who benefit from the current system.
“Mississippi has a strong tourism industry thanks, in part, to our beautiful casinos and resorts that make valuable contributions to local communities,” said Cindy Hyde-Smith, U.S. Senator. “They could do more if not for this outdated federal excise tax on sports betting that only benefits illegal offshore operations which provide zero jobs or tax revenue.”
What Is The Federal Excise Tax?
The federal excise tax on legal sportsbooks is the Internal Revenue Code. It currently imposes a 0.25% tax on the amount of wagers (handle) a sports betting operator receives and a $50 annual tax per sportsbook employee. Lawmakers established the code in 1851 to prosecute illegal bookmakers who weren’t paying taxes. Nevada paid nearly $22 million in handle tax in 2022.
With legal sports betting now available in 38 states, bill supporters see no need for this antiquated system. The WAGER Act would simply exempt legal sportsbooks from being taxed while maintaining laws against illegal operators.
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