Congressional bill aims to scrap 0.25% excise tax on betting handle

A new bill has been introduced that would scrap the US’s 0.25% excise tax on sports betting handle.

Representatives and congressional Gaming Caucus co-chairs Dina Titus and Guy Reschenthaler have introduced HR 7790, a federal bill that would scrap the US’s 0.25% excise tax on sports wagering handle.

The federal excise tax on handle

The tax was introduced in 1951 and does not apply to horse racing or sports wagering activities conducted by state lotteries. In addition to this, operators who are eligible for the tax must also pay a $50-per-head employee tax.

In 2019, the tax generated $13.1m from Nevada alone, but Titus, who introduced the legislation said that the Internal Revenue Services (IRS) “couldn’t answer how the money was being used.”

HR 7790

The bill has been referred to the House Ways and Means Committee for further consideration and if successful, the bill will repeal the 0.25% excise tax on sports wagering handle.

Titus, of Nevada’s first district, said: “Sports are back. Unfortunately, the penalty on making legal sports bets never left. The handle tax makes it more difficult for legal gaming establishments to compete with illegal operators. Repealing it will push more consumers out of the black market and into a well-regulated market. Forcing sportsbooks to pay a per-employee tax is the last thing we need when gaming establishments are still making announcements about new rounds of layoffs and furloughs.”

Reschenthaler, who serves Pennsylvania’s 14th district, said: “I’m proud to join my Gaming Caucus Co-Chair Rep. Dina Titus to introduce this important legislation that will eliminate an outdated tax and burdensome requirements on the gaming industry. Gaming is a vital economic driver in Pennsylvania, supporting over 33,000 jobs. This bill will help pave the way for economic growth and job creation in my district and throughout the nation.”

AGA supports bill

Shortly after the bill was introduced, the American Gaming Association (AGA) made a statement in which it supported the federal bill.

The AGA’s president and CEO said: “The federal excise and head taxes levied on legal US sportsbooks generate little meaningful revenue for the government. Instead, they place legitimate businesses at a significant competitive disadvantage against illicit gambling operations which skirt taxes and licensing fees. Though originally enacted in the 1950’s as a tool to curb illegal gambling, these antiquated federal taxes now give illegal operators a leg up.

“To absorb the unnecessary burden of these taxes, legal sportsbooks are forced to offer worse odds and payouts or reduce investment in promoting legal betting channels to the public. Furthermore, the head tax serves as an impediment to hiring at a time when providing jobs is critical.

“I’m grateful to the Congressional Gaming Caucus’ Co-Chairs Reps. Titus and Reschenthaler for introducing this legislation today to provide regulated operators with meaningful relief as they recover from the COVID-19 sports shutdown. Eliminating these taxes is a long overdue step to enable a legal, regulated environment for sports betting that will better protect customers and generate much-needed revenue for state and local economies.”

This comes after the AGA published new research revealing that more than half of the consumers who bet with unlicensed operators in the US did not know they gambled illegally.

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