A bipartisan group of lawmakers is once again making a case for eliminating a decades-old tax on legal sports betting. Representatives Dina Titus (D-Nev.) and Guy Reschenthaler (R-Pa.), co-chairs of the Congressional Gaming Caucus, reintroduced legislation Tuesday to repeal the federal excise tax on sports wagering. It marks their fourth attempt to get rid of what they call an outdated and unfair levy.
A Tax Rooted in the 1950s Faces New Scrutiny
The 0.25% federal excise tax on all legal sports bets—known as the “handle tax”—has been in place since 1951. Originally designed to combat illegal gambling, the tax now applies exclusively to licensed sportsbooks operating legally in 38 states and Washington, D.C. Illegal operators, by contrast, pay nothing.
Titus argues that the tax no longer serves its intended purpose. In fact, she says it puts legal sportsbooks at a disadvantage. “Illegal sportsbooks do not pay the .25% sports handle tax and the accompanying $50-per-head tax on sportsbook employees, giving them an unfair advantage,” Titus said.
There’s also uncertainty over where the tax revenue actually goes. Titus recalled once asking IRS officials about its allocation, only to be met with shrugs. “It makes no sense to give the illegal market an edge over legal sportsbooks with a tax the federal government doesn’t even track,” she said.
A Billion-Dollar Industry, Burdened by Red Tape
Since the Supreme Court’s 2018 decision to strike down the federal ban on sports betting, the industry has exploded. Today, it supports over one million jobs and pumps more than $70 billion into state and local government budgets. Pennsylvania alone accounts for over 33,000 of those jobs.
Despite its growth, industry leaders and lawmakers argue that outdated regulations continue to hold sportsbooks back. Reschenthaler emphasized that the tax discourages legal operations and ultimately fuels illicit betting. “Unfortunately, outdated tax codes and burdensome regulations penalize legal operators and incentivize illegal activity,” he said.
By removing the handle tax, supporters believe sportsbooks will have more flexibility to reinvest in their businesses, create jobs, and compete with offshore and unregulated markets.
Will Congress Finally Act?
Efforts to repeal the tax have been met with resistance before. Titus and Reschenthaler previously introduced similar legislation in 2019, 2021, and 2023, but none of those bills gained traction. Whether the 2025 version finds more success remains to be seen.
The gaming industry has long supported scrapping the tax. The American Gaming Association (AGA) has called it an unnecessary burden that hampers industry growth. Still, lawmakers will need to convince their colleagues in Congress that removing the tax is a net positive—something they’ve failed to do in the past.
Even with bipartisan backing, the bill faces an uphill climb. But with legal sports betting now a fixture across much of the U.S., its supporters hope lawmakers will finally listen.
