Proposed Changes To Federal Gaming Law In 2021
By Charlotte Spencer
Federal gaming law may be changing soon if any of the several proposed pieces of legislation currently in front of Congress pass this year. In this article, we review a few notable pieces of proposed legislation that touch on the subject of gaming. For example, H.R. 2350, introduced in April, would eliminate certain federal taxes and related requirements on gaming. H.R. 3335, introduced in May, would clarify that using wire communication to gamble on commercial greyhound racing and field coursing is prohibited. S. 126, introduced in January, would, among other things, create a permanent extension on the limitation of wagering losses in the Internal Revenue Code.
We detail each below:
H.R.2350
Short Title: Discriminatory Gaming Tax Repeal Act of 2021
Official Title Introduced: To amend the Internal Revenue Code of 1986 to repeal chapter 35 (relating to taxes on wagering)
Full text available here.
Sponsor: Rep. Titus
Co-sponsors: Rep. Keller, Rep. Horsford, Rep. Amodei, Rep. Reschenthaler
Bipartisan Support: Yes, one Democrat and three Republicans are co-sponsoring. The sponsor is a Democrat.
Committee: House Ways and Means
Introduced: April 1, 2021
Proposed Effective Date: Although it’s not clear if this will pass yet, if it does, it will apply to all taxable years starting with December 31, 2020.
Summary: This would repeal Chapter 35 of Subtitle D of the Internal Revenue Code of 1986. This is currently encoded at Sections 26 U.S.C. 4401 through 4424 of the U.S. Code. These sections deal with taxes on wagering. They impose a 0.25% tax on wagers authorized under the law of the state in which they are accepted, and a 2.0% tax on other wagers. They also impose a special $500 annual tax on each person who is engaged in receiving such wagers. They also impose record requirements and registration requirements.
H.R.3335
Short Title: Greyhound Protection Act of 2021
Official Title Introduced: To amend the Wire Act to clarify that gambling on commercial greyhound racing and field coursing using wire communication technology is prohibited
Full text available here.
Sponsor: Rep. Cardenas
Co-sponsors: Rep. Waltz, Rep. Cohen, Rep. Salazar, Rep. Murphy, Rep. Fitzpatrick, Rep. Titus, Rep. McBath, Rep. Newman, Rep. Smith, Rep. Kuster, Rep. Evans, Rep. Cartwright, Rep. Katko, Rep. Stanton, Rep. Suozzi, Rep. Lee
Bipartisan Support: Yes. This bill is sponsored by a Democrat. It is co-sponsored by 12 Democrats and four Republicans.
Committee: Judiciary
Introduced: May 19, 2021
Proposed Effective Date: Although it’s not clear yet if this will pass, if it does, it will have an effective date of December 31, 2022.
Summary: This would add the following section to the bottom of 18 U.S.C. 1084: “(f) Nothing contained in this section shall be construed to authorize gambling on commercial greyhound racing taking place domestically or internationally using wire communications or to permit the transport of animals for the purpose of conducting or furthering commercial dog racing, live lure training or field coursing.”
The aim of this legislation is to help protect greyhounds from abusive practices cited in the findings of this legislation, including prolonged confinement, drugging, and injury from over-racing.
S.126
Short Title: Tax Cuts and Jobs Act
Official Title Introduced: A bill to amend the Internal Revenue Code of 1986 to make permanent the individual tax provisions of the tax reform law, and for other purposes
Full text available here.
Sponsor: Sen. Cruz
Co-sponsors: Sen. Ernst, Sen. Braun, Sen. Inhofe
Bipartisan Support: No. All sponsors and co-sponsors are Republican
Committee: Senate Finance
Introduced: January 28, 2021
Proposed Effective Date: Although it’s not clear if this will pass yet, if it does, the portion relevant to gambling losses will apply to all taxable years starting with December 31, 2020. The effective dates of other portions vary.
Summary: This legislation contains many sections on several different areas. In this summary, we only go over those sections relevant to gaming law. Itemized losses in the Internal Revenue Code are currently detailed in 26 U.S.C. 165. Subsection D details wagering losses. This legislation would alter this section by removing language that made previous changes to it temporary. In other words, it would keep the law as it has been since 2017 instead of allowing it to expire, as it will otherwise in 2026. Specifically, it would prevent this sentence from expiring — “Losses from wagering transactions shall be allowed only to the extent of the gains from such transactions.” In other words, you cannot deduct an unlimited amount of gambling losses.
The information provided in this article should not be considered legal advice or a substitute for legal advice. Biometrica is not a law firm and cannot offer legal advice.