Controversial Federal Handle Tax Bill Sparks Debate in the Gaming Industry

In the 1950s, a federal excise tax was introduced to combat illegal gambling, specifically targeting sports wagers. This tax, amounting to 0.0025% of every sports wager, has persisted despite ongoing opposition from lawmakers. While initially affecting only Nevada, the tax now faces nationwide scrutiny.

A recent legislative proposal, named the "Gambling Addiction, Recovery, Investment, and Treatment Act," backed by Senator Richard Blumenthal and Representative Andrea Salinas, suggests redirecting the revenue generated from this federal excise tax on sports betting. The proposal aims to establish a fund dedicated to researching, treating, and preventing gambling addiction.

Under this proposal, approximately 50% of the tax, often referred to as the handle tax, would be allocated to this initiative. Senator Blumenthal emphasized the need for increased funding for research, treatment, and prevention of gambling addiction, particularly with the growing popularity of sports and online betting. He stated that federal resources are essential to provide much-needed support for those struggling with gambling addiction.

The National Council on Problem Gambling (NCPG) supports this proposal, and it has received approval from problem gambling councils in Connecticut and Oregon.

Representative Dina Titus, a long-standing opponent of the federal excise tax on sports betting, expressed surprise at the proposed legislation. She has spent a decade advocating for the tax's repeal, considering it redundant. Titus argued that states legalizing sports betting already allocate resources to combat problem gambling, making the federal excise tax unnecessary.

Chris Cylke, Senior Vice President of the American Gaming Association (AGA), echoed Titus' sentiments. Cylke pointed out that legal online gambling and sports betting activities already contribute to funding resources for problem gambling. He warned that the outdated federal excise tax places licensed operators at a disadvantage compared to the unregulated gambling sector, which pays no license fees or taxes.

The proposed handle tax bill has ignited a heated debate within the gaming industry, with opposing viewpoints on its necessity and impact.