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Titus, gaming lobbyists slam legislation that would divert sports betting tax to problem gambling

The Nevada lawmaker, who has spent a decade trying to repeal the tax, and the Gaming Association say the industry dedicates millions on the issue.
Howard Stutz
Howard Stutz

The repeal of a small federal excise tax on sports wagers has been a goal of Rep. Dina Titus (D-NV) for nearly a decade.

So imagine her surprise when two Democratic colleagues announced legislation Thursday to not only keep the sports betting tax in place but to use half of the money raised by the levy to fund problem gambling treatment and research.

The legislation, authored by Rep. Andrea Salinas (D-OR) and Sen. Richard Blumenthal (D-CT), wants to use 50 percent of the money raised by what has become known as the “handle tax” to create a funding stream dedicated to prevention, treatment and research into gambling addiction.

However, Titus called the legislation “redundant,” saying on Friday that states that have legalized sports betting in the past five years “also fund responsible gaming resources to address problem gambling.”

The American Gaming Association, the industry’s Washington, D.C., trade organization, also opposed the legislation. In a statement, AGA Senior Vice President Chris Cylke said legal gaming’s rapid growth across the U.S. has resulted in increased attention and investment into efforts to reduce problem gambling while supporting treatment and research. 

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

The federal handle tax — 0.0025 percent for every sports wager — was created in the 1950s as a way to track illegal gambling activities. At the time, Nevada was the only state with legal gaming. Cylke said with the expansion of legal opportunities, the added tax is antiquated because it puts legal operators at a competitive disadvantage with illegal offshore sportsbooks that don’t pay any taxes.

Last year, Titus and Rep. Guy Reschenthaler (R-PA) — co-chairs of the Congressional Gaming Caucus — introduced legislation to repeal the federal handle tax. No action has been taken on the bill.

Titus first launched an effort to remove the tax in 2014 when Nevada was the only state with legal sports betting. At the time, she asked the Internal Revenue Service how the money was being used but she never got an answer.

A 2018 U.S. Supreme Court decision allowed states to legalize and regulate sports betting. The activity is now available in 38 states and Washington, D.C. Another four states are considering legalizing sports betting, either through legislation or offering voters a ballot initiative.

According to the AGA, Americans wagered more than $93 billion on sports through the first 10 months of 2023, a 26 percent increase from 2022.

Titus said Nevada sports betting operators paid nearly $22 million in handle taxes in 2022, almost double the state’s total from 2019 and more than four times the national average. 

She said the legislation proposed by Salinas and Blumenthal, “would exacerbate already destructive tax policies that put the legal gaming industry at a disadvantage to illegal offshore operations.”

Rep. Dina Titus, right, D-Nev., talks to Matt Holt, president & founder of U.S. Integrity, during a tour at the sports betting monitoring company’s Henderson office on Tuesday, Aug. 1, 2023. (Jeff Scheid/The Nevada Independent)

Cylke said the handle tax was an “antiquated policy.” Offshore illegal operators, he said, don’t pay any taxes “and prey on vulnerable customers.”

Titus said she wasn’t informed by Salinas or Blumenthal about the legislation. 

The pair are not members of the Congressional Gaming Caucus, a bipartisan group with representatives from states with legal gaming activities, although Oregon and Connecticut do have legal sports betting. The legislation Titus and Reschenthaler sponsored had 13 co-sponsors — all from sports betting states. 

The bill will go to the Energy & Commerce in the House and the Health, Education, Labor and Pensions in the Senate for discussion and consideration. Neither Salinas nor Blumenthal are on those committees and Nevada does not have representatives on either committee.

In a joint statement, Salinas and Blumenthal said the legislation would create the first-ever federal funding stream dedicated to helping prevent, treat and study gambling addiction in the United States. 

“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,” Blumenthal said. “Dedicated federal resources to tackle problem gambling head-on will provide much-needed support, resources and treatment for those suffering from gambling addiction.”

Salinas and Blumenthal said the legislation was backed by the Washington, D.C.,-based National Council on Problem Gambling (NCPG) and problem gambling councils from Oregon and Connecticut.

“The investment into gambling addiction research, prevention, and treatment is a necessary step to minimize gambling-related harm nationwide and reduce its impact on countless American families,” Keith Whyte, executive director of the NCPG, said in the joint statement.

Through a spokeswoman, Mark Lipparelli, chairman of the International Center for Responsible Gaming (ICRG), which was created by the gaming industry in 1996, declined to comment on the proposed legislation until the group has had a chance to review the bill.

The Massachusetts-based organization funds scientific research on gambling disorders and responsible gambling in the U.S. 

The ICRG has received nearly $40 million in contributions from casino operators, equipment manufacturers, vendors, sports wagering companies, tribal casinos and other organizations and individuals.

Corrected at 6:04 a.m. on 1/16/2024 to reflect the total national wagers on sports betting.


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