US senators propose legislation to axe “outdated” federal excise tax
WAGER Act seeks to remove 0.25% federal excise and ‘head’ tax for US operators in a bid to quell the illegal gambling market
Two US senators have introduced the Withdrawing Arduous Gaming Excise Rates (WAGER) Act, as they aim to bring an end to the federal excise tax and annual ‘head’ tax for licensed US sports betting operators.
The proposed bipartisan legislation was introduced jointly by Nevada senator Catherine Cortez Masto and Mississippi senator Cindy Hyde-Smith.
Currently, US sports operators are obliged to pay a federal excise tax of 0.25% on all legal sports bets, in addition to a $50 annual ‘head’ tax per employee.
First established in 1951 as part of a fight against illegal gambling, the Internal Revenue Code (IRC) has drawn ire from licensed firms in the intervening years.
The senators argue these taxes create ideal conditions for illegal sportsbooks that can offer better odds and run businesses cheaper than legal operators.
The WAGER Act is designed to eliminate these taxes for operators while maintaining the laws which help tackle the black market.
Hyde-Smith said the proposed bill would help to “level the playing field” for legal sports betting operators.
She said: “Mississippi has a strong tourism industry thanks, in part, to our beautiful casinos and resorts that make valuable contributions to local communities.
“They could do more if not for this outdated federal excise tax on sports betting that only benefits illegal offshore operations which provide zero jobs or tax revenue.
“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.”
Similar legislation was introduced by members of the bipartisan Congressional Gaming Caucus (CGC) back in March 2023.
Bill Miller, president and CEO of the American Gaming Association (AGA), argued the current “antiquated” tax system makes it harder for operators to deliver products in a socially responsible manner.
He added: “Today, with sports betting legal in 38 states and Washington DC, 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.
“The AGA is grateful to Senators Cortez Masto and Hyde-Smith for their commitment to providing a safe, responsible sports betting market and to continuing to help migrate bettors out of the illegal market, which is bereft of consumer protections and a haven for bad actors and tax evaders.
“The AGA will continue to work with policymakers to enact legislation to address this harmful tax,” he concluded.
Nevada paid almost $22m in taxes on handle in 2022, almost double what the state paid in 2019.
Meanwhile, progress on introducing mobile sports betting in Mississippi stalled after the conference committee in charge of introducing House Bill 774 failed to file a report by the April 29 deadline.