Federal Handle Tax Targeted In New Bipartisan House Bill

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federal excise tax

The co-chairs of the recently-relaunched Congressional Gaming Congress introduced bipartisan legislation Friday to end the federal excise tax on legal sports bets.

Rep. Dina Titus (D) of Nevada and Rep. Guy Reschenthaler (R) of Pennsylvania co-sponsored a bill that would repeal the long-standing 0.25% tax paid on the handle for legal wagers.

US sports betting operators also pay an annual tax of $50 per employee for anyone that deals with accepting bets. That too would end.

Parties united on ending outdated tax

“Sports are back,” Titus said in a statement. “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.”

Titus is a noted opponent of the handle tax, having tried twice previously to repeal it. Those efforts both came prior to the 2018 repeal of PASPA, though. This new push to end an outdated tax from 1951 could find more momentum.

“I’m proud to join my Gaming Caucus Co-Chair Rep. Dina Titus to introduce this important legislation that will eliminate an outdated tax and burdensome requirements on the gaming industry,” Reschenthaler said.

Where does federal excise tax go?

In 2014, Titus attempted to find out where the $9 million in federal excise taxes from sports betting in Nevada were going.

But after several months, the IRS eventually told Titus they didn’t know how the funds were used. The money went to a “black hole in the general fund,” Titus told the Las Vegas Review-Journal at the time.

Titus sponsored a bill that year calling for the end of the tax. But it failed, as did a push in 2017.

The taxes brought in less than $33 million for the federal government last year, according to the American Gaming Association.

AGA also supports repeal

Bill Miller, president and CEO of the AGA, praised the legislation in a statement:

“I’m grateful to the Congressional Gaming Caucus’ Co-Chairs Reps. Titus and Reschenthaler for introducing this legislation today to provide regulated operators with meaningful relief as they recover from the COVID-19 sports shutdown,” he said.

Miller called for the end of the tax when he spoke in front of the Senate Judiciary Committee earlier this week. Legal operators have to offer worse odds and payouts because of the “unnecessary burden” of the tax, he added.

Eliminating the tax is an overdue step toward enabling a legal, regulated sports betting environment that will better protect bettors, Miller said.

The AGA recently released a survey that shows American sports bettors want to use legal sportsbooks.