Federal Handle Tax Bill Sparks Industry Controversy

In the 1950s, a federal excise tax on sports wagers was implemented as a method to fight against illegal gambling. The tax, which is 0.0025% of every sports wager has remained in place since, despite efforts of lawmakers against it. While at the time, only Nevada was affected by the tax, this is not the case at present.

Now, a newly introduced legislation, supported by Sen. Richard Blumenthal and Rep. Andrea Salinas, proposes to use the money raised from the federal excise tax on sports betting to develop a new fund that will help with research, treatment and prevention of gambling addiction.

Per the new proposal, labeled as the “Gambling Addiction, Recovery, Investment, and Treatment Act,” some 50% of the tax, which is often referred to as the handle tax, would be used for funding the initiative.

As announced by the Nevada Independent, Salinas and Blumenthal released a joint statement, highlighting the importance of dedicating more funds toward research, treatment and prevention of gambling harm across the country. “The growing legalization of sports and online betting, paired with the ability to place bets from your phone whenever you want have created a perfect storm for gambling addiction,” explained Blumenthal. Additionally, he said: “Dedicated federal resources to tackle problem gambling head-on will provide much-needed support, resources and treatment for those suffering from gambling addiction.”

According to Salinas and Blumenthal, the new proposal is supported by the National Council on Problem Gambling (NCPG). The duo confirmed that the proposed bill also enjoys approval from problem gambling councils in Connecticut and Oregon.

Not Everyone Agrees with the Proposed Handle Tax Bill

The proposed legislation about the handle tax surely surprised Rep. Dina Titus, one of the long-term opponents of the tax. For 10 years, she has been trying to repeal the federal excise tax on sports betting, deeming it “redundant.” On Friday, Titus supported her position that the federal excise tax isn’t needed considering that states that have legalized sports betting already dedicate resources toward fighting problem gambling.

“Nearly every tax dollar earmarked for problem gambling services comes from casino gaming taxes, including new legal sports betting and iGaming markets.“

Chris Cylke, SVP of the American Gaming Association

Chris Cylke, the American Gaming Association’s senior vice president, shared Rep. Titus’ position. He explained that both legal online gambling and sports betting activities across the country raise money for problem gambling. Additionally, Cylke warned that amid the expansion of legal gambling across the country, the “antiquated” federal excise tax represents a disadvantage for licensed operators and favors the illegal gambling sector, where no license fees or taxes are paid any way.