The American Gaming Association (AGA) and gaming lobbyists, in addition to Rep. Dina Titus (D-NV), are not endorsing the problem gambling funding measure presented by Sen. Richard Blumenthal and U.S. Rep. Andrea Salinas.
Last week week, the duo introduced the Gambling Addiction Recovery, Investment, and Treatment Act (GRIT), which suggests allocating 50% of the funds generated by the federal excise tax on sports betting to support problem gambling funding and research.
Rep. Titus, who has been actively pursuing the elimination of the federal excise tax imposed on sports wagers for nearly a decade, called the legislation “redundant,” saying on Friday that states that have legalized sports betting in the past five years “also fund responsible gaming resources to address problem gambling.”
Chris Cylke, AGA Senior Vice President
For his part, AGA Senior Vice President Chris Cylke said the Association will be formally opposing the measure. “Our industry’s growth means that there’s never been more attention paid to or money invested in problem gambling support than today. Nearly every tax dollar earmarked for problem gambling services comes from casino gaming taxes, including new legal sports betting and iGaming markets,” Cylke said.
The bill will go to the Energy & Commerce in the House and the Health, Education, Labor, and Pensions in the Senate for discussion and consideration. Neither Salinas nor Blumenthal are on those committees and Nevada does not have representatives on either committee.
Sen. Richard Blumenthal
The federal handle tax, 0.0025% for every sports wager, was created in the 1950s as a way to track illegal gambling activities. At the time, Nevada was the only state with legal gaming. Cylke said with the expansion of legal opportunities, the added tax is antiquated because it puts legal operators at a competitive disadvantage with illegal offshore sportsbooks that don’t pay any taxes.
The AGA has consistently backed a bipartisan bill put forth by Titus and Pennsylvania Rep. Guy Reschenthaler to repeal the federal excise tax on sportsbooks. The pair have introduced this bill every year dating back to 2020. Titus has battled the tax since 2014, when she requested the IRS to identify what the funds are used for and they could not provide an answer.
In a joint statement, Salinas and Blumenthal said the legislation would create the first-ever federal funding stream dedicated to helping prevent, treat, and study gambling addiction in the United States.
“The growing legalization of sports and online betting, paired with the ability to place bets from your phone whenever you want have created a perfect storm for gambling addiction,” Blumenthal said, as reported by The Nevada Independent. “Dedicated federal resources to tackle problem gambling head-on will provide much-needed support, resources, and treatment for those suffering from gambling addiction.”
Salinas and Blumenthal said the legislation was backed by the Washington, D.C.,-based National Council on Problem Gambling (NCPG) and problem gambling councils from Oregon and Connecticut.
While 0.25% is a low rate, because the tax is on handle rather than revenue, it adds up to a sizeable amount of money. In 2023 alone, the federal government collected over $250 million through the tax, which is more than many states collect on sports betting annually.
Depending on how much each sportsbook holds in a given month, the excise tax can eat up a substantial chunk of revenue. If a sportsbook holds 10%, then the tax amounts to 2.5% percent of all revenue.
The GRIT Act seeks to earmark half of the money generated by the federal excise tax to fund responsible and problem gambling research and programs. Using 2023 numbers, that would have earmarked $125 million for the efforts.
