Lawmakers Renew Efforts to Eliminate Federal Sports Betting Tax
Senators Reintroduce Bill to Remove Federal Sports Betting Tax
A bipartisan group of senators is pushing to eliminate an outdated federal tax on sports betting. They argue that the current tax no longer serves its original purpose and instead creates obstacles for legal sportsbooks, putting them at a disadvantage compared to offshore and unregulated operators.
Details of the WAGER Act and Its Goals
On September 12, Senators Catherine Cortez Masto of Nevada and Cindy Hyde-Smith of Mississippi reintroduced the Withdrawing Arduous Gaming Excise Rates (WAGER) Act. This legislation seeks to repeal the 0.25% federal tax on all sports wagers, as well as abolish the $50 annual fee sportsbooks must pay per employee.
Originally implemented in 1951, the tax was designed to fund federal enforcement efforts against illegal bookmaking, particularly organized crime. Today, proponents of the bill contend that the tax no longer accomplishes that objective. Instead, it imposes extra costs on licensed operators, while offshore betting sites and local bookies that evade these taxes gain an unfair advantage.
Senator Cortez Masto emphasized that the current tax structure unintentionally benefits illegal sportsbooks at the expense of regulated businesses that create jobs and contribute to local economies. Senator Hyde-Smith highlighted that casinos in Mississippi are vital for tourism and community development, yet the tax indirectly supports out-of-state and offshore competitors, limiting their growth.
Though the WAGER Act is not new—it was first proposed by the same senators earlier in 2024 without gaining significant traction—similar bills have been introduced in the House by Representatives Dina Titus from Nevada and Guy Reschenthaler from Pennsylvania.
Concerns Over Economic Impact and Tax Transparency
The renewed legislative push comes amid declining tourism in Las Vegas and southern Nevada, sparking concerns about reduced revenue for state and tribal gambling sectors. Senator Cortez Masto described this moment as an opportunity to reduce taxes and encourage local reinvestment.
Advocates within the gambling industry argue that the federal tax is substantial when viewed cumulatively. With Americans projected to wager nearly $148 billion in 2024, the current rate generates over $369 million annually for the federal government. Opponents of the tax believe these funds could be better utilized by staying within local communities to support job creation, infrastructure improvements, and tourism promotion.
Currently, revenue from this tax flows into the general fund of the U.S. Treasury without designation for any specific programs. Representative Titus has criticized this lack of transparency, noting that even Internal Revenue Service officials are unclear about how the money is allocated.
The bipartisan WAGER Act might see increased support compared to previous attempts. However, it faces similar hurdles encountered by other federal gambling reform bills, such as the recent FAIR Bet Act, which sought to restore full deductions for gambling losses but stalled in committee.
