In May 2018, the U.S. Supreme Court struck down the Professional and Amateur Sports Protection Act (PASPA), a decades-old, federal law that prevented states other than Nevada from allowing legal, regulated, single-game wagers on both collegiate and professional sports. This federal prohibition inadvertently created a massive illegal market – along with myriad, associated public policy problems. The Supreme Court’s 7-2 decision was a win for millions of Americans who seek to participate in sports wagering in a safe, legal, and regulated manner. States and tribal nations can now set their own policies to legalize and regulate sports betting in an effective manner that protects consumers and creates tax benefits for local communities. Since 2018, more than thirty states and Washington, D.C. have joined Nevada in legalizing sports betting. The AGA anticipates continued momentum behind state legalization efforts, and we will continue to advocate for policies that promote a safe and accessible marketplace.

The AGA firmly believes additional federal regulatory oversight of legal sports betting is unwarranted. States and tribal nations have proven to be effective regulators of gaming––including sports betting––and the more than 4,000 regulators nationwide have decades of experience overseeing gaming operations within their jurisdictions. To the extent that there is an acute need for federal involvement, Congress and the administration should ensure attention and resources are spent addressing the illegal market, which lacks the transparency and safeguards found in the legal, regulated marketplace.

The Internal Revenue Code currently imposes a federal excise tax of 0.25% on the amount of any legal sports wager with a commercial sportsbook, as well as an additional $50 annual head tax for every employee engaged in receiving wagers for or on behalf of any legal sports betting operator. This tax was established in the 1950s, not as a revenue source, but rather as a tool for prosecuting illegal bookmaking operations that didn’t pay the tax.

Currently, this tax serves no dedicated purpose and represents an added operating cost to legal sportsbooks that illegal operators do not pay, further impeding customers’ move away from the predatory, illegal market to safe, regulated sports betting channels. Congress can help empower the success of a safe, regulated marketplace, by repealing the federal excise tax that unnecessarily disadvantage legal sports betting operations.

As states move to legalize sports betting, the AGA engages legislatures and regulators to ensure that their policy frameworks are structured to draw consumers away from the illegal market and allow for competition and innovation.