Chairs of the Congressional Gaming Caucus Present Bill to Eliminate Federal Sports Betting Tax
Reps. Dina Titus (D-Nev.) and Guy Reschenthaler (R-Pa.), chairs of the Congressional Gaming Caucus, have introduced a bill to abolish the federal excise tax on most legal sports bets. With 33 states and DC allowing sports betting, the American Gaming Association (AGA) estimates that 68 million US adults will place bets on this year's NCAA men's basketball tournament. The tax on these lawful bets is 0.25%, which Titus and Reschenthaler believe should be removed.
As the US' richest and second-richest gaming states in terms of 2022 gross revenue, they argue that it's time to eliminate the federal levy known as the "handle tax." Titus, co-chair of the Gaming Caucus, maintains that this move will support thriving legal gaming markets and benefit local economies.
Single-game sports betting was previously limited to Nevada until the Supreme Court overturned the Professional and Amateur Sports Protection Act (PASPA) in 2018. This allowed other states to legalize it.
The Enigmatic Federal Revenue
The exact destination of the federal sports betting revenue is unclear according to Titus and Reschenthaler. The lawmakers mention that the IRS is unable to specify where the money is allocated.
The sports betting excise tax applies to all bets not operated by state-run lotteries, as well as pari-mutuel bets on horse races. The 0.25% tax is applicable to all other legal bets, requiring sportsbook operators to cover the cost.
Albeit small, the sports betting excise tax isn't unimportant to the sportsbooks. In 2022, the AGA reports the legal sports betting handle at around $93.2 billion. With 0.25% tax on most of these wagers, the federal's share likely amounts to approximately $233 million.
The handling of $50 per employee annually is mandated for legal sportsbooks. Titus and Reschenthaler contend that these taxes both deter employment in legal sports betting and promote illegal, offshore sportsbooks.
Update Required
The US sports betting industry has seen significant change and modernization in the past few years.
Titus and Reschenthaler's bill, titled "The Discriminatory Gaming Tax Repeal Act," aims to amend the 1986 Internal Revenue Code to remove excise taxes linked to sports betting. No filing number has been assigned to the House resolution as of now.
Both politicians contend that outdated tax codes and overbearing regulations penalize legal operators and foster illegal activities. The Discriminatory Gaming Tax Repeal Act intends to remove barriers to the industry, encouraging job creation and economic growth.
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