Gaming Caucus Cochairs Seek Repeal on Federal Sports Betting Handle Tax

Posted on: April 1, 2021, 11:47h. 

Last updated on: April 2, 2021, 11:03h.

Steve Bittenbender Read More
Expertise: Legislation, Sports Betting, Horse Racing.

The chairs of the bipartisan Congressional Gaming Caucus filed a bill Thursday that certainly wasn’t an April Fools joke. US Reps. Dina Titus (D-Nevada) and Guy Reschenthaler (R-Pennsylvania) want Uncle Sam’s hand out of the legal sports betting till.

sports betting
Bettors place wagers at the grand opening of Horseshoe Southern Indiana’s sportsbook in September 2019. Two Congressional representatives seek to end a federal tax on wagers made at legal sportsbooks and a per-employee fee for those establishments. (Image: Casino.org)

Their bill, which they also filed last year, seeks to eliminate the “handle tax” from legal sports wagers. With the exception of bets placed on horse racing and certain sports bets operated by state lotteries, each wager faces a levy of .25 percent. Lawmakers established the tax 70 years ago.

In a statement Thursday, Titus said that Nevada’s sportsbooks generated $13.3 million in “handle tax” revenue.

In previous years, it was just Nevada sportsbooks that paid this levy. However, since the Supreme Court overturned the Professional and Amateur Sports Protection Act (PASPA) nearly three years ago, sports betting has exploded across the country. By the end of calendar year 2020, sports betting was legal in 19 states and the District of Columbia.

“I have proposed this legislation for years and I finally feel like the momentum is on our side,” Titus said. “I look forward to continuing to work with Congressman Reschenthaler to make this bill become law.”

AGA: Handle Tax No Longer Serves Purpose

The “handle tax” has been a target of the American Gaming Association for years. The industry group says the fee, which illegal bookies and offshore sportsbooks don’t pay, make those option more attractive to bettors.

In his statement, AGA President and CEO Bill Miller noted the irony behind the tax.

While the federal excise tax’s original purpose was to punish illegal operators, this antiquated tax now aids the offshore, illegal market and disadvantages safe, legal and regulated sportsbooks nationwide,” he said. “If Congress wants to position the legal sports betting market for success, it needs to eradicate this unnecessarily burdensome tax to level the playing field for legal sportsbooks.”

According to American Gaming Association data, 17 states and the District of Columbia reported a combined sports betting handle of nearly $21.5 billion in calendar year 2020. That figure is based on commercial handles, which excludes New Mexico, where sports betting only takes place on tribal land. It also does not include New York. That state does not report the handle at the sportsbooks located at its four commercially licensed casinos.

Based on that reporting, the handle tax would be about $53.7 million. The figure would change once federal officials add New York’s tax revenue and take out any lottery-generated bets.

Feds Also Levy Tax on Each Sportsbook Worker

In addition to taxing the wager itself, the federal law also forces sportsbooks to pay a $50 fee per employee.

Both Titus and Reschenthaler said the tax threatens jobs at a time when the country seeks to recover jobs lost from the COVID-19 pandemic.

Las Vegas, Titus said, currently has the second-largest unemployment rate of any large metropolitan area.

“Unfortunately, the industry is hindered by an outdated tax code and burdensome regulations that penalize legal, regulated operators, while providing illegal operations with an unfair advantage,” Reschenthaler said.