Additional tax on gaming encourages illegal operators: US Congress woman Dina Titus

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30 states and the District and Columbia of the USA have legalized and imposed taxes on sports betting. Since 1951 the USA imposes a 0.25% federal excise tax on sports wagering handles.

Businesses that pay the handling taxes must also pay an annual $50 per-employee tax on those who work in sportsbooks. In 2019, gaming establishments in Nevada – a popular casino hub paid about $13.3 million in handling taxes – the most of any state.

This tax was introduced in 1951 and does not apply to horse racing or sports betting operated by state lotteries. According to American Gaming Association (AGA), the excise tax was originally established in 1951 as a tool to suppress illegal, organized gambling activities. In recent times, the industry has often represented that this tax is outdated and represents an additional burden encouraging customers to adapt to illegal ways.

While so, US House representatives and congressional Gaming Caucus co-chairs Dina Titus and Guy Reschenthaler in 2020 have introduced a federal bill – HR7790 – to repeal the US’s 0.25% excise tax on sports wagering hand.

“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,” Titus said while introducing the Bill.

“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,” Titus added.

In the words of the American Gaming Association, “the (handling) tax serves no dedicated purpose and represents an added operating cost to legal sportsbooks that illegal operators do not pay, further impeding customers’ move away from the predatory, illegal market to safe, regulated sports betting channels.”

Similarly, a controversial 20% blanket tax on betting and the gaming sector in Kenya, was described as a market killer by the Kenya Betting Control Board (BCB) and the major operators. Experience across the world states that a high tax on gaming led to people adapting to illegal ways to wager, thereby reducing the overall tax revenue.