U.S. Gets Ready to Tax Sports Betting
Back in May 2018, the U.S. Supreme Court abolished PASPA – the 1992 law which barred gamblers from placing bets on the outcome of a single game. To put it simply, since May 2018, sports betting is legal throughout the U.S.
According to experts, leaving the sports betting industry to the black market was impractical and has cost states a lot. Researches show that Americans spend $150 billion on illegal sports betting. However, now that sports betting is finally legal in the U.S., the country is estimated to take generate than $3 billion in tax revenues.
The U.S. made sports betting legal. But now the country wants a piece of it. According to experts, sports leagues as well as the federal government will want to impose taxes on sports betting activities. Additionally, a National Tax Office representative has stated that the amount of money won by gambling is tacked to the total income of an individual. And, as such, it should be taxed as ordinary income.
Taxes Are To Come Soon
According to SuperBettingSites.com
, all 50 U.S. states might collect $1.5 billion in taxes if sports betting is widely accepted. Experts include online sports betting in the picture, too. What is more, the aforementioned number will only be effective if a tax of 8 per cent is adopted, a percent rate proposed by New Jersey.
Experts have commented that $1.5 billion consists of less than 0.2 per cent of all states’ operating funds for the previous year. What is more, a number of states have taken the lead, and are expected to propose legal sports betting to their citizens in the near future. Those states are Mississippi, Pennsylvania, West Virginia, and Rhode Island. Additionally, Delaware, which was one of few states to permit sports betting prior to the Supreme Court decision, currently plans to substantially expand its sports betting industry.
New Jersey, the state which caused the Supreme Court to raise the ban on sports betting, can now enjoy its success. As mentioned, the state will impose an 8 per cent tax on gross gaming revenues
from sports betting at casinos and racetracks. In addition, the state has decided to impose a 12.5 per cent tax on online sports betting.
American Gaming Association Wants Lower Taxes
According to reports, the American Gaming Association has expressed concerns on the matter of sports betting taxes. Namely, the AGA wants to lessen the federal excise tax on sports betting. What is more, the AGA has commented they would prefer states as well as tribal jurisdictions to determine taxes and regulations, and not federal authorities. Additionally, AGA President Geoff Freeman has commented that the “ship has sailed”, and federal legislators should not interfere with sports betting taxation.
AGA has many priorities, one of which is centered around creating a national sports-betting data repository. This measure is said to be of help not only to law enforcement, but also to casino operators, and even to American sports leagues, by making it easy to supervise and oversee sports betting activities within the country.
Freedman has issued a letter to federal authorities in which the AGA lays out their preferred guidelines, most interesting ones of which come at the end of the letter. Sources say that in a section where potential future steps are discussed, the AGA president implores Congress to consider a 0.25 percent federal tax on handle.
Congress can make an impact in many ways. The easiest path is to reexamine federal excise tax which are currently imposed on sports betting
. However, the tax dates as far back as 1951 and had a different original purpose. Back then, the tax served as an enforcement tool dealing with illegal gambling. Instead, the tax hinders the ability of the now legal market to compete against the illegal sports betting industry. Why? Illegal sports betting does not have any taxes.
Initially, regulators welcomed a support from the federal government. They were not so favourable towards professional sports leagues.
Sports leagues, who were strongly against the legalisation of sports betting throughout the U.S. supposedly now demand a fee from bookmakers. According to experts, leagues want a fee for the right to use their data for gambling operations. That fee is said to serve another purpose. Sources say leagues have demanded that a per cent of the tax is used for measures to protect against illegal activities such as match fixing as well as improper betting.
According to experts, however, the so-called “Integrity fee” will make legal sports betting outrageously expensive, and it is expected to siphon the much-needed tax revenues from states, thus substantially increasing regulatory difficulties.
All in all, there is still no taxation on sports betting as well as on sports betting winnings. Nevertheless, with some states launching sports betting sites and establishing legal sports betting venues on land, taxes are expected to come soon.