Lawmakers Try Again to End Federal Sports Betting Tax

A group of senators from both parties wants to get rid of an old federal tax on sports betting. They say this rule does not work anymore and makes it harder for legal betting companies to compete.

Senators Revive WAGER Act to Scrap Federal Sports Betting Taxes

Sen. Catherine Cortez Masto from Nevada and Sen. Cindy Hyde-Smith from Mississippi brought back the Withdrawing Arduous Gaming Excise Rates (WAGER) Act on September 12. This bill aims to cancel the 0.25 percent tax on every sports bet and to stop the $50 yearly fee that sportsbooks have to pay for each worker.

The tax introduced in 1951 aimed to fund federal efforts to crack down on illegal bookmaking linked to organized crime. Now, the senators claim, it no longer fulfills its original goal. They argue that the extra cost burdens licensed operators while giving offshore sites and local bookies, who do not pay these fees, a competitive advantage.

Cortez Masto stressed that the current system accidentally rewards illegal sportsbooks, while holding back regulated businesses that generate jobs and boost local economies, reported The Las Vegas Review-Journal. Hyde-Smith pointed out that casinos in her state play a key role in tourism and community growth, but a tax that helps out-of-state and offshore rivals has limited them.

The bill is not a new idea. Cortez Masto and Hyde-Smith put forward a version of the WAGER Act in mid-2024, but it did not catch on. Nevada Rep. Dina Titus and Pennsylvania Rep. Guy Reschenthaler have also brought in matching bills in the House.

Critics Say Federal Betting Tax Drains Local Economies Without Clear Purpose

This effort happens when fewer people are visiting Las Vegas and southern Nevada, which makes people worry about lost money for both the state and tribal gambling markets. Cortez Masto said this is a chance to cut down on taxes and boost local investment.

Backers of the gambling industry claim the tax is not as small as it seems. Licensed operators must pay the federal government $0.25 for every $100 bet. Americans bet almost $148 billion in 2024, which resulted in over $369 million in federal income from this tax. Those who want to end this tax say this money could stay in local areas to boost jobs, improve infrastructure, and support tourism.

As things stand, the money from this tax goes into the US Treasury’s main fund without a specific use. Titus has earlier slammed the lack of clarity, pointing out that even IRS officials could not say how this money gets spent.

The WAGER Act, backed by supporters from both parties in the Senate and House, might gain more traction than in previous years. However, the bill faces the same challenges as other efforts to change federal gambling laws. This includes Titus’ recent FAIR Bet Act, which aimed to bring back full deductions for gambling losses but got stuck in committee last week.