WAGER Act Eliminates Federal Excise Tax on Legal Sports Bets, Easing Costs for Operators and Bettors

If you’ve ever placed a legal sports bet—whether through an app, at a casino, or on tribal land—this bill is about the money behind that transaction. The Withdrawing Arduous Gaming Excise Rates Act, or WAGER Act, is a short, sharp piece of legislation focused entirely on cutting a federal tax. Specifically, it updates the Internal Revenue Code to exempt legal sports wagers from the existing federal excise tax on authorized wagers. This tax break applies only if the bet is legal in the state where it’s placed, or, for tribal operations, if it complies with an approved Tribal-State gaming compact under the Indian Gaming Regulatory Act (Sec. 2). Essentially, if the bet is above board at the state or tribal level, the federal government won’t slap an extra tax on the operator for taking it.

The Cost of Doing Business Just Got Cheaper

This federal excise tax isn’t paid by the individual bettor, but by the bookmaker or operator—the casino, the sports betting app, etc. When the cost of doing business goes down for operators, that often trickles down. For the average person, this could mean better odds, fewer fees, or more competitive promotions from sportsbooks trying to attract your business. Think of it like this: if your local coffee shop no longer has to pay a specific tax on every cup of coffee they sell, they have more margin to play with, which can lead to slightly lower prices or better rewards programs for loyal customers.

Where the Money Stops and Starts

For this exemption to kick in, the bill is clear: the sports wager must comply with local law. If you’re betting in a state where sports betting is fully legalized and regulated, you’re good. If you’re on tribal land, the betting operation must be covered by a formal agreement—a Tribal-State gaming compact—that’s already in place. This clarity is helpful because it avoids confusion about which bets qualify for the tax break. The goal here is to remove a financial burden on an industry that is already heavily regulated and taxed at the state level. This change applies to all qualifying wagers placed after the date the Act becomes law (Sec. 2).

Who Benefits from the Tax Cut

The primary beneficiaries are the sports betting companies and tribal gaming operations that run these legal sportsbooks. Removing a federal excise tax directly boosts their bottom line. However, the impact extends to the states and tribes themselves, which rely on the revenue generated by these operations. By reducing the federal tax bite, the WAGER Act potentially strengthens the financial health of the legal sports betting industry, which in turn supports state and tribal economies. The only entity that loses out? The U.S. Treasury, which will see a reduction in the revenue it collects from this specific excise tax source.