U.S. Representative Dina Titus of Nevada has once again introduced legislation to remove the federal excise tax on legal sports wagers, a measure she argues places an undue burden on legitimate gaming operators. The Discriminatory Gaming Tax Repeal Act of 2025, which Titus is co-sponsoring alongside Representative Guy Reschenthaler of Pennsylvania, seeks to abolish the 0.25% federal tax applied to all legal sports bets in the U.S.

First implemented in 1951 as a strategy to counteract illegal gambling, the tax is now considered obsolete by its opponents. Titus and Reschenthaler contend that rather than discouraging illicit betting, the levy places state-regulated sportsbooks at a competitive disadvantage.

“The Discriminatory Gaming Tax Repeal Act of 2025 repeals a tax that does nothing except penalize legal gaming operators for creating thousands of jobs in Nevada and 37 other states around the nation,” said Titus according to Las Vegas Sun. “Illegal sportsbooks do not pay the 0.25% sports handle tax and the accompanying $50 per head tax on sportsbook employees, giving them an unfair advantage.”

The bipartisan bill is not a new initiative. Titus and Reschenthaler have introduced similar proposals in 2019, 2021, and 2023. Despite previous unsuccessful attempts, they remain committed to eliminating the tax, which they believe is a relic of a bygone era.

Impact on Legal Sportsbooks and the Gaming Industry

The U.S. gaming industry employs over a million people nationwide, including more than 33,000 workers in Pennsylvania. Additionally, it generates upwards of $70 billion in revenue for state and local governments. However, industry advocates argue that excessive taxation and regulatory hurdles make it difficult for legal sportsbooks to compete with offshore and underground operators.

“Unfortunately, outdated tax codes and burdensome regulations penalize legal operators and incentivize illegal activity,” Reschenthaler stated. “The Discriminatory Gaming Tax Repeal Act of 2025 will ensure the gaming industry can support good-paying jobs and promote economic growth in southwestern Pennsylvania and across the nation.”

Legal sportsbooks argue that the federal tax, in combination with high state-imposed levies, makes it harder for them to offer competitive odds and promotions. In Pennsylvania, for instance, legal sportsbooks are required to pay a 36% tax on their net revenue. Meanwhile, unregulated offshore operators are free from such financial obligations, allowing them to offer more attractive odds to bettors.

The American Gaming Association (AGA) has long advocated for eliminating the excise tax, asserting that the high cost of compliance for legal operators continues to fuel illegal gambling. According to industry estimates, licensed sportsbooks in the U.S. paid over $150 million in federal excise taxes last year alone.

A Question of Government Oversight

One of Titus’ primary criticisms of the tax is that the government itself seems to lack transparency regarding its use. She has repeatedly questioned the Internal Revenue Service (IRS) about where the funds collected from the handle tax are allocated, only to receive unclear responses.

“I once asked the IRS where the revenue from the handle tax went in the federal budget and they didn’t even know,” she said. “It makes no sense to give the illegal market an edge over legal sportsbooks with a tax the federal government does not even track.”

Although some lawmakers and officials support maintaining the excise tax as a source of federal revenue, Titus and Reschenthaler believe the repeal would foster a healthier, more competitive regulated sports betting market. The bill’s fate remains uncertain, but the representatives remain committed to pushing for legislative change.