GamblingCompliance: Bills Propose Federal Gaming Tax For U.S. Operators

12TH JAN 2017 | WRITTEN BY: CHRIS SIEROTY

The American Gaming Association (AGA) is lobbying to eliminate a “misguided” provision in a recently introduced tax overhaul bill that would subject gaming companies to a 23 percent federal gaming tax, an executive with the trade group said Wednesday.

The suggested tax rate for companies offering games of chance is buried deep within 132-page bills introduced January 3 in the U.S. Senate and House of Representatives that would repeal the federal income tax, and abolish the Internal Revenue Service (IRS).

The bill would also create a national sales tax that would be administered primarily by the states.

Senator Jerry Moran, a Republican from Kansas, authored Senate Bill 18 that would impose a federal tax on state-regulated gaming operations for the first time.

Whit Askew, vice president of government relations for the AGA, told GamblingCompliance in an email that the organization is monitoring any newly introduced legislation that directly affects the gaming industry.

“While this provision is one small component of Sen. Moran’s broader tax legislation, AGA is already working with allies on Capitol Hill to push back on such misguided policy issues that could not only negatively affect gaming patrons and the industry, but also state and local governments,” Askew said.

Direct oversight and taxation of casinos and other gaming business have historically been left to state governments, and the U.S. gaming industry has traditionally bristled at the prospect of federal encroachment.

“AGA is also following up with Sen. Moran’s office to ensure his understanding of the positive economic impact gaming drives in Kansas and across the country,” Askew said.

The bill titled the “Fair Tax Act of 2017” has a section on gaming activities and defines games of “chance” as those that include bets or wagers involving “(1) a random or unpredictable event or (2) an event over which neither the gaming sponsor nor the person purchasing the chance has control over the outcome.”

The 23 percent tax would be applied to a gaming operator’s gross receipts, minus “total gaming payoffs to chance purchasers, and gaming specific taxes … imposed by the federal, state or local government,” according to the bill.

Moran is no stranger to trying to replace the income tax with a national sales tax, and his bill’s prospects are far from certain. In 2015, Moran introduced S. 155, which never made it out of the Senate Committee on Finance.

No hearing or vote on Moran’s new legislation has been scheduled.

Meanwhile, Representative Rob Woodall, a Republican from Georgia, introduced a similar bill — HR 25 — in the House earlier this month.

Woodall’s bill has been referred to the House Committee on Ways and Means, but no hearing has been scheduled.

He introduced the same bill — HR 25 — two years ago, but that measure was not enacted.

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