A piece of bipartisan legislation introduced by U.S. Senator Catherine Cortez Masto (D-NV) and U.S. Senator Cindy Hyde-Smith (R-MS), called the Withdrawing Arduous Gaming Excise Rates Act, has gained support from the American Gaming Association (AGA) as it attempts to repeal the federal sports betting excise tax on licensed and regulated online sportsbook operators.
“The federal sports betting excise tax was enacted more than 70 years ago as a tool to prosecute illegal sports betting operators,” AGA President and CEO, Bill Miller said in a statement backing this latest piece of legislation. “Today, with sports betting legal in 38 states and Washington, D.C., this antiquated tax puts legal operators at a competitive disadvantage and rewards illegal offshore bookmakers that pay no federal or state taxes, offer no responsible gaming tools, and have no systems in place to prevent underage customers from using their platforms.”
Goals of legislation
Currently, the Internal Revenue Code, established in 1951 to prevent illegal gambling activity by bookmakers who did not pay this tax, imposes a federal excise handle tax of 0.25% on all legal sports bets placed. It also imposes a $50 annual head tax per employee at a legal sports betting business, penalizing sportsbook operators who add new employees and jobs.
“My bipartisan legislation will ensure our sports gaming industry can provide essential tax relief to consumers and our sports gaming industry, creating more jobs and keeping our tax money in the state while cracking down on illegal activities,” said Nevada Senator Cortez Mastro.
Senator Hyde-Smith of Mississippi also commented on her legislation and said, “By repealing this tax, our bipartisan Act will level the playing field, boost local economies, and ensure that gaming revenues stay here, supporting jobs and community investments.”
Genius Sports, one of the biggest sports technology companies in the world, has already partnered with the International Betting Integrity Association (IBIA) to identify suspicious betting activity and prevent match-fixing. Despite licensed sportsbooks doing more to preserve betting integrity, they wind up getting taxed on their employees and all legally placed sports wagers at 0.25% each year.
As a result, betting integrity and suspicious betting activity remain a much bigger problem for illegal offshore bookmaking operators. They are also profiting more than legally licensed and regulated online sportsbook operators since offshore operators do not receive a federal sports betting excise tax.
