Abolishing the handle tax

Two members of Congress have introduced a new bill which would repeal a federal excise tax on legal sports bets in the US.

Representatives Guy Reschenthaler and Dina Titus introduced the bill on Friday. Both representatives are members of the Congressional Gaming Caucus, a congressional group with more than 30 members that aims to raise concerns around the gambling industry.

the proposed legislation would abolish the 0.25% handle tax

If approved, the proposed legislation would abolish the 0.25% handle tax placed on most legal sports bets in the US. The bill would also see an end to an annual head tax of $50 per sportsbook employee for any operator taking sports bets. Both taxes have been in place since the early 1950s.

Commenting on the bill, Titus argued that the tax pushes consumers toward the black market. He said: “Sports are back. 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.”

AGA support for tax repeal

The American Gaming Association (AGA) has demonstrated its support of the elimination of the excise tax on its website and social media:

Part of the AGA’s argument stems from the belief that the taxes are not justified by the government funding they generate. According to the industry body, the handle tax and head tax accounted for less than $33m in federal tax dollars in 2019.

AGA CEO Bill Miller said: “The federal excise and head taxes levied on legal US sportsbooks generate little meaningful revenue for the government. Instead, they place legitimate businesses at a significant competitive disadvantage against illicit gambling operations which skirt taxes and licensing fees.”

The shift toward legal gambling

Last week, the AGA published a study which demonstrated a shift away from illegal sportsbook gambling in the US. The study, which was conducted last year, consisted of an online survey with over 3,000 American participants.

there was a 12% increase in online and mobile spend with legal sportsbooks in 2019

In states offering legal wagering, there was a 12% increase in online and mobile spend with legal sportsbooks in 2019. In contrast, there was a 25% drop in the amount spent with illegal operators.

The AGA found that 74% of people felt it was important to only use legal sportsbooks. However, 55% of illegal bettors believed they were mostly betting legally, with 84% of these bettors surprised to learn they were betting on illegal websites. As part of its fight against illegal betting, the industry group plans to educate consumers on what is and what is not legal.