Proposed legislation would exempt US sportsbooks from handle tax

U.S. Sens. Catherine Cortez Masto, D-Nev., and Cindy Hyde-Smith, R-Miss., have introduced legislation that would exempt the nation’s sportsbooks from paying a tax on every bet placed and an annual head tax imposed for every sportsbook employee.

The legislation, known as the WAGER Act, for Withdrawing Arduous Gaming Excise Rates, is similar to bipartisan legislation introduced in the House by Rep. Dina Titus, D-Nev., and Guy Reschenthaler, R-Pa., in March 2023.

If approved and signed into law, it would exempt legal sportsbooks from paying a 0.25 percent handle tax per wager and a $50 annual fee per sportsbook employee to the federal government.

The tax was established in the Internal Revenue Code in 1951 to suppress illegal gambling and just affected Nevada sportsbooks in that era. But after the U.S. Supreme Court struck down the Professional and Amateur Sports Protection Act in 2018, sportsbooks across the country were affected.

Bill proponents say the legislation would boost local economies by removing an onerous and outdated tax and keep legal sportsbooks more competitive with illegal operators that don’t pay the taxes and as a result can offer better odds on games.

In January 2023, Nevada generated $50.44 million from regulated sports betting. Nevada paid nearly $22 million in handle taxes in 2022, nearly double the state’s total from 2019.

“Nevada is home to multiple championship-level sports teams, and we know better than anyone that responsible, legal sports betting can be a great revenue source for our local economy,” Cortez Masto said. “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.”

Co-sponsor Hyde-Smith said the bill would help her constituents in Mississippi as well.

“They could do more if not for this outdated federal excise tax on sports betting that only benefits illegal offshore operations which provide zero jobs or tax revenue,” Hyde-Smith said. “By repealing this tax, our bipartisan WAGER Act will level the playing field, boost local economies, and ensure that gaming revenues stay here, supporting jobs and community investments.”

Titus and Reschenthaler, co-chairs of the bipartisan Congressional Gaming Caucus, reintroduced their House legislation prior to the 2023 NCAA basketball tournaments.

American Gaming Association President and CEO Bill Miller said the new environment of widespread legal sports betting makes the issue important to consumers.

“The federal sports betting excise tax was enacted more than 70 years ago as a tool to prosecute illegal sports betting operators,” Miller said in an emailed statement. “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.”

Contact Richard N. Velotta at rvelotta@reviewjournal.com or 702-477-3893. Follow @RickVelotta on X.