The bill aims to repeal two federal charges: a 0.25% excise tax on every sports wager and a $50 annual fee imposed on each sportsbook employee. Supporters argue that these costs unfairly burden licensed operators while doing little to curb illegal betting.
Bipartisan Push to End Outdated Levy
A bipartisan group of U.S. senators is once again seeking to eliminate a long-standing federal excise tax on sports betting. Senators Catherine Cortez Masto (D-NV) and Cindy Hyde-Smith (R-MS) have reintroduced the Withdrawing Arduous Gaming Excise Rates (WAGER) Act.
The bill aims to repeal two federal charges: a 0.25% excise tax on every sports wager and a $50 annual fee imposed on each sportsbook employee. Supporters argue that these costs unfairly burden licensed operators while doing little to curb illegal betting.
A Tax Rooted in the 1950s
The sports wagering excise tax dates back to 1951, originally designed as a tool to crack down on organized crime-linked bookmakers. Over the decades, however, the legal gambling industry has transformed. Today, more than 30 states regulate sports betting, yet the tax persists — hitting licensed operators rather than the unregulated offshore markets it was meant to deter.
What the WAGER Act Proposes
The WAGER Act represents a bipartisan attempt to modernize federal gambling policy. Its previous iteration, introduced in 2024, stalled in Congress, but lawmakers are now pushing it forward with broader support.
The measure would repeal both the 0.25% federal excise tax on bets and the $50 per-employee annual levy. While modest in appearance, these fees scale into hundreds of millions of dollars when applied to billions in wagers, eroding the profitability of legitimate sportsbooks while leaving offshore competitors untouched.
Lawmakers’ Rationale
Senator Cortez Masto argues that the current system inadvertently boosts unlicensed betting sites:
“It’s long past time to remove this outdated tax from legal sportsbooks. Instead of deterring crime, it rewards illegal websites while penalizing businesses that create jobs and fuel local economies,” she told the Las Vegas Review-Journal.
Hyde-Smith stressed that casinos and resorts in Mississippi play a vital role in tourism and economic development but face disadvantages when competing against offshore operators and newer out-of-state markets:
“For too long, this tax has hampered growth in our communities while giving illegal and offshore markets an unfair edge,” she said.
On the House side, Representatives Dina Titus (D-NV) and Guy Reschenthaler (R-PA) have put forward similar legislation.
Economic Stakes
In 2024, Americans wagered nearly $148 billion on sports, generating $369 million in federal excise tax revenue. That money flowed into the U.S. Treasury’s general fund without being earmarked for gambling enforcement or related programs. Even IRS officials have admitted uncertainty about how the revenue is used.
For states like Nevada and Mississippi, industry leaders argue that repealing the tax would encourage reinvestment in jobs, tourism, and infrastructure. Tribal operators have also voiced concerns, noting that the levy increases financial strain while leaving them at a disadvantage against untaxed offshore platforms.
Broader Legislative Context
The WAGER Act is one of several proposals aimed at reshaping federal gaming rules. Other initiatives include a House version of the bill introduced by Rep. Andy Barr (R-KY), which emphasizes restoring full deductions for gambling losses, and the FAIR Bet Act, which seeks broader modernization of gambling law.
Despite bipartisan momentum, gambling legislation remains difficult to advance due to concerns over federal revenue loss and political hesitation around gaming reforms.
Outlook: Toward Modernized Gambling Policy?
While passage is far from guaranteed, the reintroduction of the WAGER Act reflects a growing push to align federal policy with the realities of the modern sports betting landscape. If approved, the measure could pave the way for wider reforms, from streamlined tax reporting to expanded oversight of online gaming.
