Two co-chairs of the bipartisan Congressional Gaming Caucus are once again pushing for the repeal of the federal excise tax on sports betting, a law that has been in place for 70 years. The two co-chairs; Dina Titus, the US Representative for Nevada’s 1st congressional district, and Guy Reschenthaler the US Representative for Pennsylvania’s 14th congressional district, introduced the legislation in the House on Thursday with renewed focus after a similar proposal last year failed to gain traction.
The 7-decade old law in question falls under the Revenue Act of 1951 and it imposes a 0.25% tax on the total handle collected by legally operating commercial sportsbooks in the country. Additionally, this law requires each of the books to part with a $50 levy for every employee each year.
Time for Urgent Change Due to Expanded Gaming and Tough Pandemic Conditions
Originally, this law was established in 1951 to clamp down on illegal sports betting, but now that over half of US states have legalized the activity, the two lawmakers have for a long time argued that it is outdated and doesn’t fit in the modern world of sports betting. Further, the Congressional Gaming Caucus Co-Chairs Representatives are seeking the annulment of the tax in a bid to give the states more breathing space at a time when there’s a hefty revenue shortfall due to the pandemic.
On Thursday, Congresswoman Titus (NV-1) cited the fact that sportsbooks in her state paid a handle tax bill of about $13.3 million which is more than any other state in the country. Yet, the IRS couldn’t point a finger on where exactly that money went when she once tried to follow up. Congresswoman Titus also added that:
“The handle tax punishes legal gaming operators and encourages consumers to place bets illegally. As more states recognize the benefits of legalizing and regulating sports betting, repealing the handle tax will create jobs in Southern Nevada and across the country. At a time when Las Vegas is experiencing the second-highest unemployment rate of any large metro area in the country, forcing sportsbooks to pay an additional tax on each employee makes it harder to bring about economic recovery.”
Similarly, Congressman Reschenthaler (PA-14) also gave a strong statement on Thursday, mentioning the tough economic times that his state is facing after the pandemic hit the gaming industry hard. Part of his statement said:
“Gaming has a $6.34 billion economic impact in Pennsylvania and supports over 33,000 jobs. Unfortunately, the industry is hindered by an outdated tax code and burdensome regulations that penalize legal, regulated operators while providing illegal operations with an unfair advantage. The bill will ensure the gaming industry, hit hard by COVID-19 mandated closures and the cancellation of sporting events, is able to support good-paying jobs and economic growth in southwestern Pennsylvania and across the country.”
Unnecessary Burden on Sportsbooks
The American Gaming Association (AGA), the USA’s gaming industry trade body has also been one of the most vocal opposers of the federal excise tax. According to the AGA, this law is counterintuitive as it is currently giving illegal offshore sportsbooks an edge over licensed operators, and yet it was established to fight illegal sports betting sites.
Bill Miller, the AGA President, and CEO threw his support behind the Congressional Gaming Caucus co-chairs through the following statement:
“While the federal excise tax’s original purpose was to punish illegal operators, this antiquated tax now aids the offshore, illegal market and disadvantages safe, legal and regulated sportsbooks nationwide. If Congress wants to position the legal sports betting market for success, it needs to eradicate this unnecessarily burdensome tax to level the playing field for legal sportsbooks.”
Rep. Titus had also taken the opportunity to present her arguments during the annual Ways & Means Committee Member’s Day hearing to lobby for the change in the law – a hearing which took place on Tuesday, 23rd March. The co-chairs strongly believe that this time might be the charm especially because of the unique challenges that the Coronavirus pandemic has posed to the gaming industry at large.