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A federal bill has been put forward by two Representatives to remove a 0.25% tax on sports betting handle that has existed for almost 70 years. 

Reps. Dina Titus and Guy Reschenthaler, who are also co-chairs for the Congressional Gaming Caucus, have introduced HR7790 to bring this particular form of tax up to scratch. 

Operators who are eligible to pay the sports wagering tax are also obliged to pay $50 dollars per head in employee tax. 

The legislation has been praised by the American Gaming Association (AGA), who argue that it harms regulated operators and serves little purpose in terms of state revenue. 

“Difficult for legal establishments to compete” 

HR7790 has now been referred to the House Ways and Means Committee. 

Introduced in 1951, the federal sports betting handle tax applies to regulated operators – though state lotteries are exempt. In 2019, Nevada alone raised $13.1 million from this form of taxation. 

However, according to Titus – who is of Nevada’s first district – the Internal Revenue Service (IRS) “couldn’t answer how the money was being used”. 

Titus also spoke about how this seemingly-outdated tax has no place in the modern American gaming landscape, and how it empowers unregulated operators. 

Pointing to how the return of sports made this an ideal time to discuss the matter, she said the following. 

“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.”

Protecting jobs in the midst of a crisis 

Over the past few months, casinos across the US have been forced to furlough staff due to the COVID-19 pandemic. Some have since announced that there will be permanent layoffs.

Reschentaler is of Pennsylvania’s 14th district, and believes that removing the federal sports betting wagering tax could help to protect some of those employees at risk of losing their livelihood. 

“I’m proud to join my Gaming Caucus co-chair Representative Dina Titus to introduce this important legislation that will eliminate an outdated tax and burdensome requirements on the gaming industry.

“At a time when so many employees in the industry are struggling, this bill ends the counterproductive practice of penalizing employers for creating jobs by eliminating a per employee tax. 

“Gaming is a vital economic driver in Pennsylvania, supporting over 33,000 jobs, and this legislation will help pave the way for economic growth and job creation in my district and throughout the nation.”

AGA agrees with the calls to remove the federal sports betting handle tax

Last week, the AGA revealed that over 50% of people in its study, who were residents in states where sports betting is legal, had bet with unregulated operators. This was despite them thinking that the place they wagered their money was legal. 

Across the entire US, the federal wagering tax generated less than $33 million altogether last year. 

AGA President and Chief Executive Bill Miller believes that along with being a waste of time for the state and tax authorities, it adds unnecessary strain to regulated operators. 

“The federal excise and head taxes levied on legal U.S. 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 1950’s as a tool to curb illegal gambling, these antiquated federal taxes now give illegal operators a leg up,” the statement says. 

“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.”

He continued with the below.

“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.”

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