The Congressional Gaming Caucus has renewed efforts to repeal the long-standing federal “handle tax”, a 0.25% levy on all legal sports wagers in the United States. Representatives Dina Titus and Guy Reschenthaler have reintroduced legislation to remove what they consider an outdated tax that penalizes legal sports betting operators while allowing illegal bookmakers to thrive.

The tax, initially introduced in 1951 to combat illegal gambling, now generates millions in unnecessary costs for licensed sportsbooks. With legal sports betting contributing over $70 billion to state and local governments, industry advocates argue that its removal would fuel economic growth, increase job creation, and level the playing field.

Understanding the Handle Tax: An Outdated Burden on Legal Operators
1. The Origins of the Federal Excise Tax on Sports Betting
The 0.25% handle tax was enacted more than seven decades ago, at a time when illegal gambling operations dominated the U.S. betting landscape.

Established in 1951, the tax aimed to deter illegal gambling by targeting legally sanctioned betting businesses.
It includes a $50 per employee fee on licensed sportsbooks, further adding to the cost burden on legal operators.
At the time, the legal sports betting market was extremely limited, and the federal government sought to generate revenue while regulating the industry.
Fast forward to 2025, and the sports betting landscape has drastically changed, with legal sportsbooks operating in 38 states and Washington, D.C.. However, the handle tax remains unchanged, creating a competitive disadvantage for legitimate operators.

Why the Handle Tax Is Considered a Hindrance to Legal Betting
1. Penalizing Legal Businesses, Empowering Illegal Operators
According to Rep. Dina Titus, the handle tax disproportionately harms legal sportsbooks while allowing unregulated offshore and illegal bookmakers to operate without additional taxation.

Illegal sportsbooks do not pay the 0.25% handle tax or the $50 per employee fee, giving them a financial advantage over licensed U.S. operators.
Licensed operators are required to comply with strict regulations, consumer protection laws, and responsible gaming measures, yet they bear the additional burden of federal excise taxes.
This tax discourages legal expansion, ultimately reducing tax revenue for state and local governments while enabling black-market betting to flourish.
Rep. Guy Reschenthaler emphasized that the legal gaming industry employs over one million Americans and contributes billions in tax revenue, yet it continues to be unfairly burdened by an outdated policy.

2. The Economic Impact: How Repealing the Tax Benefits the Industry
The sports betting industry has exploded in recent years, contributing to significant job growth and economic expansion across the country.

Since 2018, the legal betting market has generated over $70 billion for state and local governments.
In Pennsylvania alone, online casinos and sportsbooks support approximately 33,000 jobs, contributing billions in annual revenue.
Repealing the handle tax would allow sportsbooks to reinvest in growth, increase job creation, and enhance consumer offerings.
Proponents argue that eliminating the tax would lead to increased competition, better odds for consumers, and more innovation in the sports betting sector.

Legislative Efforts: The Push to Repeal the Handle Tax
1. The Discriminatory Gaming Tax Repeal Act of 2025
In an effort to modernize the sports betting tax framework, Representatives Titus and Reschenthaler have introduced the Discriminatory Gaming Tax Repeal Act of 2025.

This bill seeks to eliminate the 0.25% handle tax and the $50 per employee fee, which many industry leaders consider obsolete and counterproductive.
Similar bills were introduced in 2019, 2021, and 2023, but they failed to gain traction in Congress.
The 2025 version comes at a time when sports betting has become a mainstream industry, increasing its chances of receiving bipartisan support.
With 38 states already benefiting from legalized sports betting, industry advocates believe that removing this tax will further accelerate growth while discouraging illegal gambling activity.

Industry Support: Why Sportsbooks and Operators Back the Legislation
1. Competitive Disadvantage Hurts the Market
Legal sportsbooks have consistently argued that the handle tax puts them at a competitive disadvantage.

Major sportsbook operators including DraftKings, FanDuel, BetMGM, and Caesars Sportsbook have expressed support for repealing the tax.
By eliminating this financial burden, licensed operators would have greater flexibility to improve customer promotions, increase payouts, and invest in technology.
Increased competitiveness could help shift more players away from offshore and illegal sportsbooks, benefiting the regulated market and consumer protections.
2. The Role of State Governments in Supporting Repeal
State gaming commissions and lawmakers in high-revenue betting markets like New Jersey, Nevada, and Illinois have also backed efforts to eliminate the federal tax.

State-level taxes already generate billions in revenue, making the federal excise tax redundant and unnecessary.
Removing the tax would allow states to retain a greater share of tax revenue, instead of sending it to the federal government.
Challenges to Repealing the Handle Tax
1. Congressional Gridlock and Federal Budget Concerns
While the gaming industry supports repeal, passing this legislation in Congress remains a challenge.

Federal lawmakers may be reluctant to remove a revenue-generating tax without identifying a replacement.
Budget-conscious legislators could oppose the measure, arguing that removing the handle tax would reduce federal revenue streams.
Prior attempts to pass similar bills have failed, despite strong industry backing.
2. Opposition from Anti-Gambling Advocates
Some policymakers and advocacy groups oppose the expansion of sports betting and may use the handle tax as a deterrent against further legalization.
Concerns about problem gambling and consumer protection could be used as arguments against repealing the tax.
Despite these challenges, the strong financial case for eliminating the handle tax could push this legislation closer to approval than previous attempts.