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Can Sportsbooks Survive a 1 Percent Tax Hike as US Supreme Court Leans Towards Legalization

Written by:
Guest
Published on:
Jan/10/2018

The following is brought to you by I. Nelson Rose, one of the leading attorneys in the world of gambling and a regular contributor to the Gambling911.com website.

The U.S. Supreme Court appears to be about to rule that the federal law that prevents states from legalizing sports betting, the Professional and Amateur Sports Protection Act (“PASPA”), is unconstitutional. There are at least a dozen states that appear ready to enact new laws to introduce or expand legal intra-state wagering on sporting events this year, once the High Court decision is announced.
 
This raises, as always, the question of who will get the money.
 
Indiana Rep. Alan Morrison has introduced a bill that would give the national sports leagues 1% of the new sports betting handle, as an “integrity fee.” The “sports governing bodies,” of course, think this is a great idea. But is imposing a 1% fee on gross gaming wagers in addition to a proposed 9.25% state tax on gaming revenue, on top of the existing 0.25% federal excise tax on the handle, a good idea for operators?
 
In 2008, the State Legislature of Delaware was considering reopening sports books in racinos, which the state was allowed to do, because it had been grandfathered-in under PASPA. I was retained as the legal consultant by the Delaware State Lottery, which runs all sports betting, to advise the state on what the tax rate should be on the new sports books.
 
I prepared a report and recommendations. I've posted a simplified version of the report’s discussion of the impact of taxes on operators, and a quick analysis of the Indiana plan, which appears to be spreading across the country.


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