New Bill to Tax Games of Chance Introduced by Kansas Senator

by Jim Hall

Games of chance may soon face taxes in the United States if a new bill proposed by a Kansas Senator is passed into law.

In the United States, there is constantly a war between what games are considered chance and what is considered skill. This fight remains due to operators wanting to be able to offer certain games in their state but also wanting to stay within the law. In many states, casino games are not allowed due to being a game of chance and not one of skill. Some states do not have such regulation so casino gaming is either not truly regulated or is regulated. In the near future, we may see operators offering games of chance facing a new tax as a senator recently introduced a new measure.

Games of Chance Tax

Jerry MoranSenator Jerry Moran of Kansas has proposed a new bill that will see games of chance paying a 23% tax. Moran introduced his proposal during the beginning of the 115th Congress defining the term ‘chance’ in the legislation. The bill also includes special tax treatment for operators of gaming including a group that will have sportsbooks of Nevada as well as companies providing daily fantasy sports gaming.

The bill was introduced on January 3rd and has 132 pages, entitled the Fair Tax Act of 2017. The measure has special provisions in place for what are being called gaming sponsors and defines the term ‘chance’ as games that include a bet or wager that involves a random unpredictable event or an event in which neither the sponsor of the game or the person purchasing the chance has control of the outcome.

The bill does not state if the special tax treatment will be applied to operators of daily fantasy sports contests as well as the sportsbooks in Nevada. Operators who provide daily fantasy sports, such as DraftKings and FanDuel, have continued to define daily fantasy sports as a game of skill. This definition is given by the operators despite the fact that a court has not addressed as to if DFS contests are considered a game of skill.

Traditional sports betting does involve skill, as stated by the United States Justice Department as well as the NFL. However, this could change as Representative of New Jersey, Frank Pallone, has stated that a full review of federal sports gambling laws in the United States will take place and the goal may be to pass new legislation. If this takes place, changes may need to be made based on this new tax law.

A few months ago, Pallone stated that the nation’s gambling laws on a federal level need to be review to see how they can work together. By doing so, a fairer playing field can be created in regards to all types of gambling, the type that are offered online as well as land-based. This would include daily fantasy sports and sports betting.

The legislation proposed by Moran reportedly focuses on repealing the federal income tax and abolishing the United States Internal Revenue Service. The bill would create a national sales tax that would be administered by the individual states. The bill is only in the preliminary stages with no hearing or vote set to take place as of yet on the matter.

Reception for the Tax?

Games of chance have not been on the radar for some time and the focus has been mainly on online poker, DFS and sports betting within legislature. It will be interesting to see if the measure garners any attention and if legislators will be in agreement with Moran that a tax needs to be created.