Recently, in Murphy v. National Collegiate Athletic Association, 138 S. Ct. 1461 (2018), the Supreme Court ruled that the Professional and Amateur Sports Protection Act was unconstitutional. As a result, each state may decide whether to allow sports wagering.

Sports wagering, like wagering in general, is subject to federal excise taxes, regardless of whether the activity is allowed by the state. 

Sports wagering is subject to the following excise taxes:

  • For wagers authorized by the state –
    • 0.25 percent of the amount wagered, and
    • An annual occupational tax of $50 for each principal or agent accepting wagers
       
  • For wagers not authorized by the state –
    • 2 percent of the amount wagered, and
    • An annual occupational tax of $500 for each principal or agent accepting wagers

The following federal excise tax returns are due if you are in the business of accepting sports wagers:

  • Form 730, Monthly Tax Return for Wagers. File Form 730 for each month by the last day of the month following the month for which you’re reporting taxable wagers. File a return each month whether or not you have taxable wagers to report. For more information, see the instructions for Form 730. 
  • Form 11-C, Occupational Tax and Registration Return for Wagering. File the first Form 11-C before wagers are accepted. After that, file a renewal return by July 1 for each year wagers are accepted. For more information, see the instructions for Form 11-C.

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