AGA’s Miller To Congress: Repeal Sports Betting Tax
Speaking before the Senate Judiciary Committee last week, American Gaming Association President and CEO Bill Miller (l.) reassured lawmakers that legal betting on college sports protects the integrity of young athletes, and also applauded a measure to end the federal excise tax on legal sports bets.
On Wednesday, July 22, American Gaming Association (AGA) President and CEO Bill Miller testified before the U.S. Senate Judiciary Committee at a hearing on “Protecting the Integrity of College Athletics.”
Rather than opening college sports to manipulation and match-fixing, Miller said a legal, regulated sports betting industry may offer the best protections against corruption.
“The gaming industry and sports governing bodies share a significant mutual interest in upholding the utmost integrity of all sporting events,” he told the panel, led by committee chairman, South Carolina Senator Lindsey Graham. “Even the mere suggestion of scandal poses the risk of inflicting significant damage to our operators’ brands and reputations, as well as real economic harm if a bet is placed on an event if the outcome is fixed.
“That is why our industry takes sports integrity very seriously, deploying innovative technologies and other resources available to track legal wagering activity and identify suspicious activities.”
Miller’s testimony, conducted remotely, coincided with the release of AGA research showing that sports bettors in the United States are increasingly choosing legal, regulated sports betting providers over illegal neighborhood or offshore bookies.
In states with legal sports betting, average spending with illegal bookies fell 25 percent last year, while legal online and mobile betting spend increased 12 percent. Most bettors who went from illegal to legal sportsbooks—25 percent—said they made the switch so they could feel sure their bets would be paid out. Twenty percent indicated that they simply had become more aware of the legal options, and the legal protections guaranteed in regulated markets.
While almost two-thirds of bettors (74 percent) agreed that it’s important to only bet through legal providers, 52 percent participated in the illegal market in 2019, chiefly due to confusion about which online operators are legitimate. Their confusion is understandable, as many offshore bookies advertise heavily in the U.S., and even major news organizations such as the New York Times, the Wall Street Journal, ESPN and Yahoo Sports have inadvertently promoted illegal books.
“Illegal, offshore operators continue to take advantage of unknowing consumers,” said Miller in a recent statement. “This only worsened during the sports shutdown, with unregulated bookmakers offering odds on everything from the weather and shark migration patterns to whether your friends’ marriage will survive the pandemic. The AGA is focused on educating customers on how to wager legally and the dangers of the illegal market, especially with the return of the MLB and NBA this month.”
Miller told senators that illegal wagering, which generates upwards of $150 billion per year, poses an ongoing risk to the integrity of sports. “Fortunately, more than four in 10 (41.3 percent) Americans have—or will soon have—legal channels available to bet on sports in their home state,” he said. “However, a vast illegal market continues to operate and remains the only option for far too many.
“Accordingly, we believe the shared goal of policymakers and other stakeholders should be to seize this opportunity to bring betting activity into a legal market, under state and tribal regulatory oversight, which will enhance transparency, consumer protections, and game and bet integrity, while supporting jobs and generating tax revenue.”
Miller also pointed to the AGA’s marketing code, which emphasizes the importance of respecting the legal age for sports betting, supporting responsible gaming, controlling digital media and websites and monitoring compliance.
After his testimony, he commented, “Importantly, I impressed upon the committee that sports betting regulation should continue to be led by the more than 4,000 experienced state and tribal regulators nationwide. The federal government can be a strong partner in combating the illegal market and leveling the playing field for operators playing by the rules. It is a great privilege to represent the U.S. casino gaming industry every day, and that was especially true on Capitol Hill today.”
Miller said he wholeheartedly supports bipartisan legislation to repeal the 0.25 percent tax paid on the handle for legal wagers, co-sponsored by Rep. Dina Titus (D) of Nevada and Rep. Guy Reschenthaler (R) of Pennsylvania.
“Sports are back,” Titus said in a statement about the bill. “Unfortunately, the penalty on making legal sports bets never left. The handle tax makes it more difficult for legal gaming establishments to compete with illegal operators. Repealing it will push more consumers out of the black market and into a well-regulated market.”
Reschenthaler added, “I’m proud to join my Gaming Caucus Co-Chair Rep. Dina Titus to introduce this important legislation that will eliminate an outdated tax and burdensome requirements on the gaming industry.”
According to Legal Sports Report, in 2014 Titus unsuccessfully tried to discover where $9 million in federal excise taxes collected from Nevada sports betting had gone. She told the Las Vegas Review-Journal the money went to a “black hole in the general fund,” then sponsored a bill calling for the end of the tax. It failed then, and failed again in 2017. The taxes brought in less than $33 million for the federal government last year, according to the American Gaming Association.
Miller said the tax is an “unnecessary burden” and its repeal would “provide regulated operators with meaningful relief as they recover from the Covid-19 sports shutdown.”
University of Pittsburgh Athletic Director Heather Lyke appeared remotely at the hearing to support a ban on wagering on collegiate sports.
Lyke said that the presidents of Atlantic Coast Conference schools unanimously oppose gambling on college sports over concerns for the well-being of the student body, the athletes and potential threats to the integrity of competitions, according to a report by ESPN.
“We urge Congress to directly address gambling on intercollegiate athletics and prohibit it,” she told the committee.
Chairman Graham appeared to agree with Lyke. “I think there’s a lot of betting that people in the office will fill out the sheet, but none of us are going to influence the outcome of a game because we’re putting 20 bucks in and you may win $200,” he said during the hearing. “I’m not saying that’s right, but that’s a different problem than people who are in the business of gaming, who really would make a lot if (a game) went one way or the other.”
Miller said offshore sportsbooks and illegal bookmakers constitute the real threat. “We realize some stakeholders remain concerned about bets betting placed on collegiate events—based primarily on the presumption that unpaid, amateur athletes are more at risk of being corrupted by those seeking to influence the outcome of sporting competitions,” Miller told the committee. “While that may indeed be the case, it is also perhaps the most compelling reason to apply strict regulatory oversight, and that only comes from the legal market.”