Deleted: ¶ Urge Congress To Pass H.R. 2350 – Repeal Outdated Wagering Excise Tax
To:
National Indian Gaming Association Member Tribes
From:
Ernest L. Stevens, Jr., Chairman Jason Giles, Executive Director
Re:
Urge Congress to Repeal Wagering Excise Tax
Deleted: 23 Deleted: 4 Formatted: Justified
Date:
March 25, 2022
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On April 1, 2021, Rep. Dina Titus (D-NV) introduced H.R. 2350, the Discriminatory Gaming Tax Repeal Act, to fully repeal the outdated gambling excise tax set forth at Internal Revenue Code (I.R.C.) Chapter 35 Subtitle D. The bill has 9 bipartisan co-sponsors, including Reps. Reschenthaler (R-PA), Amodei (R-NV), Horsford (D-NV), Keller (R-PA), Souzzi (D-NY), Brown (D-MD), Hinson (R-IA), Joyce (R-PA), Garbino (R-NY), and Boyle (D-PA). While the bill has been referred to the House Ways & Means Committee, no hearings or further actions have been scheduled or taken place. Congress enacted the wagering excise tax, I.R.C. Chapter 35 Subtitle D, (found at 26 U.S.C. §§ 4401-4405) in 1951 to target organized crime and discourage gambling. Over the past 70 years, provisions concerning the wagering excise tax have been amended to exempt wagers placed “with … a parimutuel wagering enterprise licensed under state law,” effectively exempting bets on horse and dog racing activity, and “in a sweepstakes, wagering pool, or lottery which is conducted by an agency of a State.” Currently, the wagering excise tax assesses 0.25 percent of the full amount of money wagered on a sporting event, as well as an additional $50 annual tax for every employee engaged in receiving wagers on behalf of any legal sports betting operator. The law has also been found to apply to pull tabs and certain lotteries. In the late 1990s and early 2000s, Tribal Governments fought the application of the wagering excise tax to wagers on pull-tab games conducted by Tribal gaming enterprises. Section 2719(d) of IGRA provides that: The provisions of title 26 (including sections 1441, 3402(q), 6041, and 6050I, and chapter 35 of such title) concerning the reporting and withholding of taxes with respect to the winnings from gaming or wagering operations shall apply to Indian gaming operations conducted pursuant to this chapter, or under a Tribal-State compact … that is in effect, in the same manner as such provisions apply to State gaming and wagering operations . (Emphasis added). Accordingly, Tribal Governments argued that since 1) state lotteries are expressly exempt from the wagering excise tax and 2) IGRA requires that the wagering excise tax must be applied to Tribal Governments “in the same manner as such provisions apply to States,” the Class II pull-tab games should also be exempt from the tax. Nevertheless, in Chickasaw Nation v. United States , the U.S. Supreme Court held that Tribal Governments are subject to the wagering excise tax. The
Formatted: Normal (Web), Justified, Pattern: Clear (White) Deleted: on Deleted: Amended several times over the past 70 years, the wagering excise Deleted: tax now exempts “any wager placed with … a parimutuel wagering enterprise licensed under state law” – which essentially exempts bets on horse and dog racing activity. In 1976, Congress again amended the tax to exempt any “wager placed in a sweepstakes, wagering pool, or lottery which is conducted by an agency of a State….”¶ Deleted: pursuant to the Indian Gaming Regulatory Act (“IGRA”).… Deleted: t Formatted: Justified Deleted: Tribes
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interpretations of IGRA and Deleted: Tribal Governments
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