WAGER Act

Bill Number

S. 2773

Origin Chamber

Senate

Congress

119th Congress, Session 1

Policy Area

Taxation

Status

Introduced

Latest Action

2025-09-11: Read twice and referred to the Committee on Finance.

Last Updated

2025-09-23T15:28:06Z

AI-Generated Summary

Summary of S. 2773 - WAGER Act

Purpose

The legislation aims to exempt legal sports betting from the federal excise tax on authorized wagers, reducing the financial burden on this growing industry while maintaining taxes on other forms of gambling.

Key Provisions

• Exemption for Sports Betting: Adds a new paragraph to Section 4402 of the Internal Revenue Code of 1986, exempting wagers on sporting events from the excise tax if they are:
• Not prohibited by the law of the state where the wager is placed, or
• Allowed under an approved Tribal-State gaming compact (agreements between tribes and states for casino operations, governed by the Indian Gaming Regulatory Act).
• Effective Date: The exemption applies to wagers placed after the bill's enactment into law.
• Short Title: "Withdrawing Arduous Gaming Excise Rates Act" or "WAGER Act."

Significant Changes to Existing Law

• Under current law, authorized wagers (legal bets on games of chance or skill) are subject to a 0.25% federal excise tax imposed on the wager amount.
• This bill creates a specific carve-out for sports betting, removing the tax for bets on events like football or basketball games, provided they comply with state or tribal regulations. Other gambling activities, such as casino games or lotteries, remain taxable.

Potential Impacts

• On Government Agencies: The Internal Revenue Service (IRS) would collect less revenue from sports betting, potentially reducing federal tax income by millions annually, depending on industry growth. This could affect budgeting for programs funded by excise taxes.
• On Citizens: Bettors could see indirect benefits through lower operational costs for sportsbooks, possibly leading to better odds or promotions, encouraging more participation in legal sports betting.
• On International Relations: Minimal direct impact, though it may indirectly support U.S. sports leagues' global partnerships by making domestic betting more competitive.
• Overall, the change could boost the sports betting economy, which has expanded since the 2018 Supreme Court decision allowing states to legalize it, but at the cost of forgone federal revenue.

Main Stakeholders Affected

• Sports Betting Operators: Companies like DraftKings or FanDuel would benefit from tax savings, potentially increasing profits and expansion.
• States and Tribes: Governments that regulate and tax sports betting locally could see increased activity and revenue from their own fees or taxes, without federal interference.
• Gamblers and Consumers: Individuals placing sports bets would indirectly gain from a more efficient industry.
• Federal Government and Taxpayers: The U.S. Treasury and IRS face reduced excise tax collections, which might require adjustments in fiscal planning.

Notable Legal, Constitutional, or Political Implications

• Legal: Aligns with the post-2018 landscape after the Supreme Court struck down the federal ban on sports betting (Professional and Amateur Sports Protection Act), promoting state and tribal autonomy in gambling regulation. No direct challenge to federal taxing authority under the Constitution's 16th Amendment (which allows Congress to levy income and excise taxes).
• Constitutional: Raises no apparent issues, as it modifies an existing tax code provision without infringing on states' rights or equal protection principles.
• Political: Could appeal to lawmakers from states with thriving sports betting markets (e.g., Nevada, New Jersey), but might draw criticism for reducing federal revenue amid budget debates. As a bipartisan bill (introduced by Sens. Cortez Masto and Hyde-Smith), it reflects efforts to support economic growth in the gaming sector without broader gambling reform.

This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.

Sponsor

Sen. Cortez Masto, Catherine [D-NV]

Cosponsors (1)

Sen. Hyde-Smith, Cindy [R-MS]

Recent Actions

• 2025-09-11: Read twice and referred to the Committee on Finance.
• 2025-09-11: Introduced in Senate

Bill Versions

• Withdrawing Arduous Gaming Excise Rates Act — issued 2025-09-11 — PDF (2 pages)