Congress to Consider Elimination of Sports Betting Excise Tax

Pro-gambling lawmakers are again trying to help give regulated sportsbooks an edge over offshore rivals.

US Representatives Dina Titus and Guy Reschenthaler are once again introducing a bipartisan bill to eliminate the federal excise tax on sportsbooks. The tax was first implemented in 1951 to deter illegal operators, but many believe it is outdated now that sports betting has been legalized. The tax requires that legal operators pay a 0.25% tax on their handle and $50 per employee.

Proponents of the bill argue that the industry and country have changed dramatically since the 1951 tax was enacted. Now, that tax is hindering legal sportsbooks' ability to compete with offshore rivals. They also claim the IRS has no way of showing where the revenue generated is going, meaning it won’t be missed or cut.

Congress has rejected previous attempts to eliminate the tax, but this year could be different. The country’s new leadership has taken a very pro-betting stance and is looking to help cut taxes for many large industries. While many industry experts expect another uphill battle, that could change if the White House gives its blessing.

If passed, the bill would not affect the ability of states to levy taxes of their own.

Strong Support for Tax Remains

Opponents of the current bill to eliminate the 1951 excise tax don’t necessarily disagree with the argument but have concerns over problem gambling. There is a growing belief among lawmakers that sportsbooks are using deceptive practices to target bettors and lure them into wagering more than they can afford.

While the tax revenue generated may not have a clear benefit, many believe operators should pay even more, given the spike in problem gambling. That will lead to staunch opposition to the new bill but could kick off a conversation about how the tax revenue generated is used.