A Pennsylvania lawmaker is calling for the elimination of “unnecessary” taxes on legal sportsbook operators.

Regulated sports betting operators are required by the Internal Revenue Code to pay a 0.25% federal excise tax on all wagers as well as a $50 annual tax for every employee engaged in receiving bets, according to the American Gaming Association.

In a push back against the excise tax, U.S. Rep. Guy Reschenthaler, a Republican from Peters, and Rep. Dina Titus, a Democrat from Nevada, introduced bipartisan legislation that would repeal the tax.

“At a time when so many employees in the industry are struggling, this bill ends the counterproductive practice of penalizing employers for creating jobs by eliminating a per employee tax,” Reschenthaler said. “Gaming is a vital economic driver in Pennsylvania, supporting over 33,000 jobs, and this legislation will help pave the way for economic growth and job creation.”

The AGA said the tax accounted for less than $33 million in federal tax dollars last year, adding that sportsbooks operate with a “very low margin.” In Nevada, sportsbooks’ revenue is normally 5% of the total amount wagered before accounting for taxes and operator expenses.

Still, between New Jersey, Nevada, Pennsylvania and Indiana, sports betting will generate about $1 billion in taxable gross gaming revenue this year, Forbes reported.

According to AGA President and CEO Bill Miller, the federal taxes were enacted in the 1950s as a way to curb illegal gambling. Today, he noted, the taxes do the opposite by putting businesses at a competitive disadvantage against illicit gambling operations that Miller said skirt taxes and licensing fees.

“To absorb the unnecessary burden of these taxes, legal sportsbooks are forced to offer worse odds and payouts or reduce investment in promoting legal betting channels to the public,” Miller said. “Furthermore, the head tax serves as an impediment to hiring at a time when providing jobs is critical.”

Titus added that repealing the taxes will “push more consumers out of the black market and into a well-regulated market.”

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