Adam Roarty is a journalist covering sports betting, regulation, and industry innovation for CasinoBeats. His coverage includes tax increases in the UK, covering breaking stories in the ever-evolving landscape of US betting such as the...
Read Full BioSenators Catherine Cortez Masto and Cindy Hyde-Smith officially reintroduced the Withdrawing Arduous Gaming Excise Rates (WAGER) Act last week.
The WAGER Act would remove the 0.25% federal excise tax placed upon all legal wagers and the annual “head” tax equating to $50 per employee.
The bill was originally introduced last year, but failed to pass in the last US congressional session. Nevada Senator Masto says the tax relief aims to boost local sports tourism and the state’s economy.
In a press release on her website, she commented: “In Nevada, legal sports betting is a thriving industry that adds to the world-class experience of watching our championship-level professional sports teams.”
“It’s past time to exempt legal sports betting from outdated taxes that are actually incentivizing illegal sportsbooks. This is bipartisan, commonsense legislation that will help boost local economies across the United States.”
Tax Relief Will Curb Offshore Betting & Prediction Markets
Echoing Masto’s comments, Sen. Hyde-Smith of Mississippi said: “Mississippi’s casinos and resorts play a key role in tourism, jobs, and community investment along our Gulf Coast.
“For too long, this outdated federal tax on sports betting has held this industry back, all while giving illegal offshore operators, and now new out-of-state run prediction markets, an unfair edge against our more traditional casinos in Mississippi and elsewhere.”
Mississippi has not taken any action against prediction markets yet, but Nevada is in an ongoing legal battle with Kalshi. Licensed sportsbooks have long argued that increasing taxes on the regulated industry is a boost to unregulated betting platforms.
As states fight against the growth of prediction markets and sweepstakes casinos, the Senators believe this bill will help operators attract users.
Masto Advocating for Gambling Tax Breaks
In addition to the WAGER Act, Masto has also been active in repealing the gambling tax change that was included as an amendment to Donald Trump’s One Big Beautiful Bill (OBBB).
She introduced the FULL HOUSE Act in the Senate, but progress was blocked by Republican Sen. Todd Young. Young wanted to include an unrelated tax break for religious organizations as part of the legislation.
In response, Masto commented: “It is a shame that we cannot pass this commonsense S.2230 [FULL HOUSE Act] because Republicans want to weigh it down with unrelated measures that they voted to support.”
On the amendment that means gamblers can only deduct 90% of losses from their winnings before paying tax, she added: “This is a Republican piece of legislation that is actually causing people to pay taxes on money they lost. It makes no sense. And that’s all this is, is to try to fix it. So I’m disappointed, but I am not done.”
Another bill that aims to repeal the tax change, the FAIR BET Act, was blocked from being added to a national defense act last week. Both bills remain active in their respective chambers as standalone pieces of legislation.
States Raising Taxes
While Masto campaigns for tax breaks for gamblers and companies, many states are increasing the taxes on the industry. Nevada has one of the lowest rates, at just 6.75%, which is well below the national average of around 20%.
Illinois is the most notable example of a state attempting to capitalize on the growth of gambling. The state increased its rate from 15% to a sliding scale, with high-volume operators paying 40%. This year, it introduced a per-bet fee on operators, charging companies $0.25 or $0.50 for every sports wager.
In response, sportsbooks have either introduced a betting surcharge to users (FanDuel, DraftKings, Caesars, Fanatics) or raised the minimum bet amount (Circa Sports, BetRivers, BetMGM, ESPN Bet, Hard Rock Bet).
Elsewhere, New Jersey, Maryland, Ohio, and Louisiana have all increased their tax rates on gambling companies. Other states, such as Wyoming and North Carolina, are also considering proposals to raise rates.
Higher Taxes Don’t Always Equal to Higher Tax Revenue
Sportsbooks have protested against the tax increases with the same argument as Masto and Hyde-Smith, saying that higher rates lead to bettors using unregulated platforms. The volume wagered at both licensed and unlicensed sportsbooks is growing.
In the Netherlands, a tax increase led to the country actually collecting less revenue due to a fall in betting handle. This was coupled with other restrictions, however, such as a maximum monthly deposit limit and a ban on gambling advertising in sports.
It is a balancing act for states to find the correct rate that maximizes revenue while protecting the industry’s growth. The WAGER Act aims to help companies balance their books, but if states continue to raise rates, it will have little impact.
