Bill Introduced to Abolish US Excise Tax on Sports Bets

  • A new bill would end the excise tax and $50 annual tax per sportsbook employee
  • The two legislators argue that the excise tax unfairly favors the black market
  • AGA supports the new bill; CEO Bill Miller has been vocal about his opposition of the excise tax
American flag flying in front of US Capitol Building
Two US congresspeople have introduced new legislation which could put an end to the nation’s excise tax on legal sports bets. [Image: Shutterstock.com]

Abolishing the handle tax

Two members of Congress have introduced a new bill which would repeal a federal excise tax on legal sports bets in the US.

Representatives Guy Reschenthaler and Dina Titus introduced the bill on Friday. Both representatives are members of the Congressional Gaming Caucus, a congressional group with more than 30 members that aims to raise concerns around the gambling industry.

the proposed legislation would abolish the 0.25% handle tax

If approved, the proposed legislation would abolish the 0.25% handle tax placed on most legal sports bets in the US. The bill would also see an end to an annual head tax of $50 per sportsbook employee for any operator taking sports bets. Both taxes have been in place since the early 1950s.

Commenting on the bill, Titus argued that the tax pushes consumers toward the black market. He 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.”

AGA support for tax repeal

The American Gaming Association (AGA) has demonstrated its support of the elimination of the excise tax on its website and social media:

Part of the AGA’s argument stems from the belief that the taxes are not justified by the government funding they generate. According to the industry body, the handle tax and head tax accounted for less than $33m in federal tax dollars in 2019.

AGA CEO Bill Miller 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.”

Last week, Miller testified before the US Senate Judiciary Committee on how legal, regulated sports betting markets help to ensure the integrity of sports. As part of this testimony, he encouraged Congress to repeal the federal excise tax on sports wagers. Miller described the new bill introduced on Friday as a “long overdue step.”

The shift toward legal gambling

Last week, the AGA published a study which demonstrated a shift away from illegal sportsbook gambling in the US. The study, which was conducted last year, consisted of an online survey with over 3,000 American participants.

there was a 12% increase in online and mobile spend with legal sportsbooks in 2019

In states offering legal wagering, there was a 12% increase in online and mobile spend with legal sportsbooks in 2019. In contrast, there was a 25% drop in the amount spent with illegal operators.

The AGA found that 74% of people felt it was important to only use legal sportsbooks. However, 55% of illegal bettors believed they were mostly betting legally, with 84% of these bettors surprised to learn they were betting on illegal websites. As part of its fight against illegal betting, the industry group plans to educate consumers on what is and what is not legal.