Extras on Excise: D.C. is Racing to Be the First DMV Metro Area Jurisdiction to Legalize Sports Gambling

In an effort to legalize sports gambling ahead of Maryland and Virginia, District of Columbia councilmembers introduced B22-0944, the Sports Wagering Lottery Amendment Act of 2018, which adds sports wagering to the list of legalized gambling activities and imposes a tax on the gross revenue of sports gambling. D.C. council member Jack Evans, one of the members who introduced the bill said, “I want legalized sports betting in the District ahead of Virginia and Maryland” during the bill’s hearing, as reported by the Daily Tax Report: State. Approval of this bill would allow the District to join ten other jurisdictions that currently impose sport gambling taxes or fees—Arkansas, Delaware, Maine, Mississippi, Nevada, New Jersey, Pennsylvania, Rhode Island, New York, and West Virginia.

Under B22-0944, all sports wagering operators would be subject to a 10 percent tax on gross sports wagering revenue, payable monthly to the District Treasurer. The tax applies to the revenue from sports gambling realized after certain payments and expenses.

The bill also imposes a licensing requirement on entities seeking to engage in sports gambling activities within the District, except for activities conducted directly by the District of Columbia’s Office of Lottery and Gaming (Office). These entities will be required to obtain one of four types of licenses created by the bill before engaging in sports wagering activities: operator, supplier, management services provider, or occupational. The licensing fees vary among the license types as follows:

  • the operator’s license is valid for five years, and the fee is $50,000 for both initial and renewed licenses;
  • the management service providers license and suppliers license are both valid for one year, and the license fees are $10,000 for initial licenses and $2,000 for renewals; and
  • the occupational license is valid for one year, and the fee is $100 for both initial and renewed licenses.   

The Office is also authorized to conduct and operate sports gambling activities and can issue licenses for sports wagering retailers, licensed lottery and daily numbers games agents. A sports wagering retailer license is valid for two years, and the associated license fee is $5,000 for an initial or renewed license.

In the hopes of raising more revenue, D.C. and other jurisdictions have become eager to legalize and begin taxing sports gambling following the 2018 U.S. Supreme Court decision in Murphy v. NCAA, which repealed the Professional and Amateur Sports Protection Act, a federal law prohibiting states from approving sports gambling systems. 

Track the progress of D.C.’s B22-0944 and other state bill’s related to sports gambling with Bloomberg Tax coverage.

Continue the discussion on Bloomberg Tax’s State Tax Group on LinkedIn: Should sports gambling taxes be higher, lower, or equal to other types of gambling? Why or why not?

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