Gambling tax to be abolished in the USA

In order to prevent discrimination against licensed providers, two US politicians have proposed abolishing the gambling tax in the USA. In the land of opportunity, there are of course other taxes in addition to the gambling tax that should be retained. But how sensible is the abolition of the gambling tax and could the plan also be a model for Germany?

If a bipartisan bill proposed by two US senators has its way, the gambling tax in the USA could soon be facing the end. Specifically, the two senators Cindy Hyde-Smith and Catherine Cortez Masto have proposed completely abolishing the special tax. The aim is not to put licensed providers at an additional disadvantage compared to illegal providers.

Is the US gambling tax fuelling the black market?

According to the two politicians, the current gambling tax means that licensed providers are treated unfairly. Compared to illegal providers, they are at a competitive disadvantage and players are tempted to gamble on the black market due to the gambling tax. After all, no gambling tax is levied here. At GambleJoe, we also asked ourselves last summer whether less regulation means fewer illegal offers.

Naturally, the gambling companies welcome the plans of the two senators. A few weeks ago, another US senator proposed reforming the gambling tax and, among other things, investing the revenue from the tax in the interests of player protection.

How high is the current gambling tax in the USA?

The current situation in the USA is that licensed providers have to pay a gambling tax of 0.25% on the stake to the state. Similar to Germany, this is a stake tax and not a tax on gross gaming revenue as is usually the case. For this reason, the current gambling tax places an enormous burden on gambling companies, which according to industry representatives leads to an additional burden of 5%. Back in February 2022, we at GambleJoe reported on the confusion surrounding the 5.3% gaming tax in Germany.

The US Gambling Association welcomes the abolition of the national gambling tax and is of the opinion that the abolition will ultimately lead to the legal gambling market becoming more attractive and therefore safer. Furthermore, the US senators are also convinced that a more attractive gambling market would also create new jobs and ultimately strengthen the economy.

The fact that a tax on stakes is an enormously high burden for operators and players is clearly demonstrated by the example of Germany. In Germany, the player tax is currently still 5.3% of the stake and is therefore significantly higher than the gambling tax in the USA, which is now to be abolished. We recently reported on GambleJoe that tax revenues from virtual slot machines have collapsed in Germany. 

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