While a number of responsible gambling advocacy groups like the National Council for Problem Gambling, the premier trade organization for gambling in North America will not be supporting the problem gambling funding measure put forth by Sen. Richard Blumenthal and U.S. Rep. Andrea Salinas.
This week, the pair introduced the Gambling Addiction Recovery, Investment, and Treatment Act (GRIT), which proposes to take half of the funds generated by the federal excise tax on sports betting and apply it to problem gambling funding and research.
AGA issues statement against GRIT Act
The American Gaming Association (AGA) told SBC Americas it will be formally opposing the measure, which was filed earlier this week.
AGA Senior Vice President, Government Relations Chris Cylke provided the following statement:
“Our industry’s growth means that there’s never been more attention paid to or money invested in problem gambling support than there is today. Nearly every tax dollar earmarked for problem gambling services comes from casino gaming taxes, including new legal sports betting and iGaming markets.
Congress enacted the federal sports betting excise tax in the 1950s as a tool to prosecute illegal gambling operations. Today, this antiquated policy puts the nascent legal market at a competitive disadvantage against offshore illegal operators, who do not pay any taxes and prey on vulnerable customers.
The AGA opposes the GRIT Act and will continue to educate Congress about why enacting bipartisan legislation to repeal the excise tax on legal sports betting operators is necessary to ensure we can effectively migrate Americans into the protections of the regulated market.
We look forward to working with Sen. Blumenthal, Rep. Salinas and other stakeholders to combat illegal gambling and address problem gambling in ways that do not further enshrine bad tax policy and give criminals a leg up.”
Bipartisan bill to eliminate excise tax has failed to get traction
The AGA has consistently backed a bipartisan bill put forth by Nevada Rep. Dina Titus and Pennsylvania Rep. Guy Reschenthaler to repeal the federal excise tax on sportsbooks. The pair have introduced this bill every year dating back to 2020. Titus has battled the tax since 2014, when she requested the IRS to identify what the funds are used for and they could not provide an answer.
Titus has put forth numerous bills over the past decade to repeal the 0.25% federal tax on sports betting handle but has never gotten much momentum behind the effort.
Sportsbooks paid over $250M in federal excise tax in 2023
While 0.25% is a low rate, because the tax is on handle rather than revenue, it adds up to a sizeable amount of money. In 2023 alone, the federal government collected over $250 million through the tax, which is more than many states collect on sports betting annually.
Depending on how much each sportsbook holds in a given month, the excise tax can eat up a substantial chunk of revenue. If a sportsbook holds 10%, then the tax amounts to 2.5% percent of all revenue.
The GRIT Act seeks to earmark half of the money generated by the federal excise tax to fund responsible and problem gambling research and programs. Using 2023 numbers, that would have earmarked $125 million for the efforts.
