In the 1950s, a federal excise tax on sports wagers was put in place as a way to combat illegal gambling. This tax, which amounts to 0.0025% of every sports bet, has remained in effect despite efforts by lawmakers to repeal it. While initially only Nevada was impacted by the tax, it now affects other states as well.

A new bill introduced by Sen. Richard Blumenthal and Rep. Andrea Salinas aims to utilize the funds generated from the federal excise tax on sports betting to establish a new fund for the research, treatment, and prevention of gambling addiction. The proposed legislation, called the “Gambling Addiction, Recovery, Investment, and Treatment Act,” suggests that 50% of the tax, also known as the handle tax, will be allocated for this initiative.

Sen. Blumenthal emphasized the importance of allocating additional funds towards addressing gambling addiction, particularly with the rapid growth of sports and online betting. He stated that federal resources dedicated to combating problem gambling would offer much-needed support for those struggling with addiction.

The National Council on Problem Gambling (NCPG) supports the proposed bill, and it has garnered approval from problem gambling councils in Connecticut and Oregon, according to Salinas and Blumenthal.

However, not everyone is in favor of the proposed handle tax bill. Rep. Dina Titus, a long-time opponent of the tax, believes it is unnecessary given that states with legalized sports betting already allocate resources to address problem gambling. She argues that the majority of funding for problem gambling services comes from casino gaming taxes, including those from legal sports betting and online gambling.

Chris Cylke, the senior vice president of the American Gaming Association, also shares Rep. Titus’ stance. He pointed out that legal online gambling and sports betting generate funds for addressing problem gambling. Cylke also expressed concerns that the federal excise tax puts licensed operators at a disadvantage and favors the illegal gambling sector, which does not pay license fees or taxes. He described the tax as “antiquated” in the current landscape of legal gambling expansion.

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