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:

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