Sports betting operators in the state of Nevada may soon have more money in their pockets to create more jobs for the state’s residents if a determined local Congresswoman gets her way.
Representative Dina Titus (Democrat–Nevada) recently resumed her push to repeal the Silver State’s sports betting excise tax. Titus’ determination to bring the issue of the excise tax back to light has come in a difficult environment whereby the state’s casinos have lost millions in revenue and laid-off thousands of casino workers due to the global pandemic and the related restrictions. Titus has urged Congress to eliminate the 0.25% tax on state’s sports betting handle during a presentation before the U.S. House of Representatives Ways and Means Committee before Easter. According to the Congresswoman;
“The handle tax is aiding illegal, offshore gaming operations and hindering the hard-hit gaming industry here at home from rebounding from the COVID pandemic,” Titus said in her presentation during the legislative chambers’ annual Members Day hearing.
In 2020, Congresswoman Titus and fellow Congressman Representative Guy Reschenthaler, a Republican from Pennsylvania – the joint chairs of the Congressional Gaming Caucus – put forward a proposal to eliminate that the excise duty on sports betting. However, on that occasion, the proposal failed to advance out of the committee stage of the process.
Notably, five U.S. states, including Nevada, racked up a tax bill to the IRS of at least $4 million based on their 2020 sports betting handle.
Congresswoman Titus has been seeking some clarification as to where the 2019 Nevada Excise Tax (of an estimated $13.3 million) wound up and what it was spent on or if it simply went into the consolidated revenue bucket of government money. To date, the Congresswoman is yet to receive an official response to her enquiries.
The Federal Excise Duty on Gaming is Outdated
When Congress first came up with the concept of the Revenue Act in the 1950s, the was law was instituted to establish a method of putting an end to illicit gambling activity at the state level. However, the law’s detractors argue that the measure has precisely the opposite effect.
It is argued that the Federal Excise Duty acts as a prop to the nation’s illegal black sports betting market, which of course, goes totally unregulated and unencumbered by the restrictions of tax payments.
Senior Vice President of government relations at the American Gaming Association (AGA), Chris Cylke, reinforces that what was a practical excise duty 70 years ago when it was first introduced, now actually gives the black market an unfair advantage;
“It’s time for Congress to eliminate this outdated, counterproductive tax which provides little revenue to the federal government and unintentionally impedes our shared goal of moving customers away from the predatory illegal market to safe, regulated betting channels,” Cylke wrote recently.
Since the PASPA Act was repealed in 2018 and legal sports betting has spread far and wide across the United States, many states have generated millions in additional revenue from sports wagering. With the amount of money flooding through the legal sports wagering system, the IRS has in turn also taken in a healthy return after the repeal of PASPA. It is estimated that this current 2021 spring, as many as 150 million Americans could potentially pay taxes on their sports winnings, which is up approximately 23 million from those paying tax in 2020.
Interestingly, other forms of betting, such as horse racing, are exempt from the excise duty. Congresswoman Titus seems to have got it right. Taxing sports betting unnecessarily while other forms of wagering get off scot-free feels like an anachronism and the law needs an urgent update.