Back in 1951, the feds enacted an excise tax on all sports bets in Nevada. At 0.0025 percent of every sports wager, it doesn’t amount to much in the larger stream of revenue, at least if you consider 2021’s figure of $20 million to be small potatoes.
Almost a decade ago, Nevada Rep. Dina Titus called for repeal of the tax, without success. Now she hopes her latest effort won’t fall on deaf years, especially with the growing number of states offering sports betting. Her bill has 13 co-sponsors all from states with legalized sports wagering.
To date, 31 states and Washington, D.C. have approved sports betting. It looks like another five should go legal in 2023.
American Gaming Association (AGA) Vice President of Government Relations Alex Costello said the excise tax disadvantages legal operators.
“If we continue to draw people into the legal marketplace, it’s better for state revenues,” Costello told the Nevada Independent. “We’ll be using this research to try and push for the repeal of that tax.”
In 2021, Nevada sportsbooks collected a record $455.1 million in revenue on a handle of $8.1 billion—also a record—and the excise tax came to some $20 million. Through the first 10 months, Nevada sportsbooks have already collected $358.8 million in revenue on wagers of $6.9 billion, with the excise tax accounting for more than $17 million.
Titus wants that money to stay in Nevada.
“It gives the illegal operators an advantage because they don’t pay any of that tax,” Titus said.
Nevada was the largest payer of the excise tax, but now trails New York, New Jersey and Illinois in total annual sports betting handle.
According to the AGA, those wagers produced a handle of more than $73 billion nationwide through October, meaning the handle tax is more than $182 million.
“It’s starting to be some real money and I take it that folks are starting to take notice,” Titus said, adding that eliminating the handle tax “will hopefully allow legal operators to be more competitive and encourage more consumers to participate in the regulated marketplace where they are better protected from financial and cyber threats.”
Titus is co-chair of the Congressional Gaming Caucus, a bipartisan group. In June, the attorney generals of Nevada and Arizona wrote a letter to the congressional leaders in both chambers asking for a repeal of the tax.
“The federal wagering excise tax was put in place in 1951 as a tool to suppress illegal, organized gambling activities and collect information for prosecuting authorities,” they wrote. “In the present context, the excise tax clearly fails to aid the government in stopping illegal sports betting operations.”
Titus believes the end-of-the-year bill before Congress could include repeal of the tax. And If not?
“We’ll just keep pestering the Treasury Department every so often,” Titus said.
