Supporting the Legal Sports Betting Market
Since the federal ban was overturned in 2018, states and sovereign tribal nations have had the opportunity to establish frameworks for legal sports betting, which protect consumers and create tax benefits for local communities.
Embracing America’s Passion Through Effective Regulation
In May 2018, the U.S. Supreme Court struck down the Professional and Amateur Sports Protection Act (PASPA), a decades-old federal law that prevented states other than Nevada from allowing legal, regulated wagers on collegiate and professional sports. This federal prohibition inadvertently created a massive illegal market — along with a myriad of associated public policy problems.
The Supreme Court’s 7-2 decision was a win for millions of Americans who seek to participate in sports wagering in a safe, legal and regulated manner. States and tribal nations can now set their own policies to legalize and regulate sports betting in an effective manner that protects consumers and creates tax benefits for local communities.
Since May 2018, sports betting is legal in 38 states and Washington, D.C., and has generated more than $2.45 billion in federal, state and local taxes.* This tax revenue funds infrastructure, education, responsible gaming education, problem gambling services, and other core priorities.
*Based on AGA’s compilation of state gaming regulator reporting and estimates of federal excise tax.
Repealing Federal Excise Tax on Sports Betting
The Internal Revenue Code currently imposes a federal excise tax of 0.25 percent on the amount of any legal sports wager with a sportsbook, as well as an additional $50 annual head tax for every employee engaged in receiving wagers for or on behalf of any legal sports betting operator. This tax was established in the 1950s, not as a revenue source, but rather as a tool for prosecuting illegal bookmaking operations that didn’t pay the tax.
Currently, this 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. Congress can help empower the success of a safe, regulated marketplace by repealing the federal excise tax that unnecessarily disadvantages legal sports betting operations.