5% Federal Sports Betting Tax Could Raise Nearly $100B, Says Policy Group

Plenty of states aren’t shy about raising sports betting taxes or considering such moves. It may be time for Uncle Sam to consider doing the same.

Currently, the federal excise tax on sports betting is just 0.25%, but the Bipartisan Policy Center argues that if that rate is boosted to 5%, making it the fifth-largest federal excise tax, $97 billion in revenue could be generated over a decade. Take it to 10% and the sports betting tax would be the second-largest excise tax behind only the gas levy and it’d raise $182 billion over 10 years.

A 5% sports betting tax would generate significant federal revenue. (Image: Bipartisan Policy Center)

The policy group points out that if Congress were to pass a law raising the federal sports betting tax to 5%, it’d likely result in the number of bets placed declining 4% on a yearly basis. If the more ambitious 10% tax hike was implemented, the amount of placed wagers could decline by 10%.

Some states that have implemented sports wagering tax increases have experienced declines in the number wagers placed, but no material declines in handle or collected revenue. That is to say that when taxes are passed onto bettors, they may bet less, but they make up for the decreased volume with increased wager size.

Federal Sports Betting Tax not Capitalizing on Post-PAPSA World

Since the 2018 Supreme Court ruling on the Professional and Amateur Sports Protection Act (PAPSA), regulated sports bets placed in this country swelled 24f-fold in dollar terms, but federal tax policy isn’t capitalizing on that growth. It’s actually been declining for decades.

• https://www.casino.org/news/5-federal-sports-betting-tax-could-raise-nearly-100b/