American Gaming Association (AGA) President and CEO Bill Miller has issued a statement on bipartisan legislation introduced late last week by Republicans Dina Titus and Guy Reschenthaler to repeal the federal excise and head taxes.
The legislation repeals the 0.25% excise tax placed on all legal sports bets, known as the “handle tax”. Certain types of sports betting, including betting on horse racing and sports betting operated by state lotteries, are already exempt from the levy.
But for those businesses that pay the excise tax there is also an annual $50 per-employee tax on those who work in sportsbooks.
Said Miller: “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 Though originally enacted in the 1950s as a tool to curb illegal gambling, these antiquated federal taxes now give illegal operators a leg up.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.”
In 2019, gaming establishments in Nevada paid about $13.3m in handle taxes – the most of any state. When Congresswoman Titus once sought to find out how the federal government allocated the money it received from this tax she said that “…the IRS couldn’t answer how the money was being used”.
In announcing the legislation, Titus stated: “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.”