S. 2773: Withdrawing Arduous Gaming Excise Rates Act

This bill, titled the Withdrawing Arduous Gaming Excise Rates Act or WAGER Act, proposes an amendment to the Internal Revenue Code of 1986 to exempt sports betting from certain excise taxes on authorized wagers. Below are the main points of what the bill entails:

Key Provisions

• Exemption from Excise Tax: The bill seeks to amend Section 4402 of the Internal Revenue Code, specifically by adding a provision that states sports betting, which is legally permitted under state law or a Tribal-State gaming compact, will not be subject to the excise tax on authorized wagers.
• Conditions for Wagering: The exemption applies only to wagers that:
• Are not prohibited under the applicable state law where the wager is accepted.
• Comply with an approved Tribal-State gaming compact grounded in the Indian Gaming Regulatory Act.
• Are placed concerning any sporting event.
• Effective Date: The provisions outlined in the bill will take effect for wagers placed after the bill's enactment.

Implications of the Bill

The intent of the bill is to potentially stimulate the sports betting market by removing a tax burden that might discourage operators or bettors, thereby supporting broader participation in sports wagering. This could have several financial implications at both state and federal levels, particularly for jurisdictions that have legalized sports betting.

Relevant Companies

• DraftKings (DKNG): As a prominent sports betting platform, a tax exemption could improve their profit margins and competitiveness in the sports wagering market.
• FanDuel (SB): Another major player in the sports betting industry, this change could also enhance their financial performance and attract more users.
• Golden Nugget Online Gaming (GNOG): With a focus on online gaming, the business may see an uptick in sports betting activity if the tax burden is lifted.