In a persistent move to modernize sports betting regulations, bipartisan co-chairs of the Congressional Gaming Caucus, Democratic Representative Dina Titus of Nevada and Republican Representative Guy Reschenthaler of Pennsylvania, have reignited efforts to repeal a federal excise tax on sports wagers, citing its obsolescence and unfair advantage to illegal operators.

Persistent legislative challenges:

Introduced in 1951 to combat illegal gambling activities, the 0.25% excise tax on all legal sports bets has been scrutinized for its relevance in today’s vastly changed gambling landscape. The tax, according to critics, no longer serves its original purpose and instead puts legal sportsbooks at a competitive disadvantage.

Titus and Reschenthaler have consistently challenged the tax, arguing that it unfairly penalizes legal betting operators who contribute significantly to the economy. Their legislative efforts, which began as early as 2019, aim to level the playing field by eliminating what they consider a discriminatory tax that benefits illegal counterparts who do not pay these fees.

The tax has been a burden for legal sportsbooks, particularly during major betting events like the NCAA March Madness tournament, which sees billions in wagers. Legal operators in states like Nevada and New York, where betting is a significant economic activity, are especially affected.

In 2024 alone, sportsbooks in New York processed bets totaling over $19 billion, illustrating the substantial financial impact of the tax. The removal of this tax could enhance the profitability of these operations and support further growth and job creation in the industry.

Growing bipartisan support for repeal:

The push to discard the handle tax has garnered increasing support from various stakeholders, including prominent figures and organizations within the gaming industry. According to Las Vegas Review-Journal, the American Gaming Association (AGA) has backed the repeal, emphasizing the tax’s significant impact on legal gambling entities.

Support extends beyond the gaming industry, with bipartisan co-sponsors advocating for the repeal in Congress. The efforts reflect a broader recognition of the need for tax reforms that do not penalize legal businesses or impede economic growth.

If repealed, the tax cut could save states like Pennsylvania millions annually, which could support further economic initiatives. For instance, Pennsylvania, being the fifth-largest sports betting state, could have saved approximately $21 million in 2024 alone.

The legislative proposal, known as the Discriminatory Gaming Tax Repeal Act of 2025, seeks to ensure that the gaming industry can continue to support good-paying jobs and stimulate economic growth across the nation. “Unfortunately, outdated tax codes and burdensome regulations penalize legal operators and incentivize illegal activity,” said Reschenthaler.

The ongoing debate and legislative efforts to repeal the handle tax highlight the dynamic nature of regulatory frameworks in response to the evolving sports betting landscape. As more states legalize sports betting and recognize its economic benefits, the pressure to remove outdated impediments like the handle tax will likely increase.