Jay Kornegay, the vice president of SuperBook Sports, is interviewed at the Westgate Friday, Feb. 2, 2018.
Friday, Aug. 2, 2024 | 2 a.m.
When information started to spread on social media about a proposal in the U.S. Senate to exempt sportsbooks in the United States from paying a handle tax, a question was quickly raised by gamblers:
“If the tax is repealed would that possibly allow books to offer more competitive (betting) lines to customers?” one user posted on X.
Withdrawing Arduous Gaming Excise Rates, or the WAGER Act, calls for sportsbooks to stop paying a 0.25% excise tax placed on all wagers. In Nevada, that amounted to $22 million in 2022, said the office of U.S. Sen. Catherine Cortez Masto, D-Nev., who proposed the legislation this week with Sen. Cindy Hyde-Smith, R-Miss.
Jay Kornegay, executive vice president at Westgate’s SuperBook and one of the industry’s leading voices, says the repeal could pave the way for potentially better odds. But, he stresses, odds and practices vary from operator to operator.
“Some of the players are commenting about how they hope (eliminating the tax) will make the ladders better,” said Kornegay, referencing prop bets where the odds are progressively better the higher you get up the ladder.
“We’ve been a fair and aggressive book with pricing and better odds over the years. We’ll continue to do that. (We feel) it’s a little cheaper to bet at SuperBook than other places.”
The bill is similar to what was proposed in the U.S House of Representatives in 2023 by Rep. Dina Titus, D-Nev. Her bill has been stuck in committee since it was introduced.
As sports wagering has spiked in popularity, the tax bill on sports wagers in Nevada has doubled since 2019, Titus’ office said. For every $100 wagered, the excess tax is 25 cents.
“My bipartisan legislation will ensure our sports gaming industry can provide essential tax relief to consumers and our sports gaming industry, creating more jobs and keeping our tax money in the state while cracking down on illegal activities,” Cortez Masto said in a statement.
The tax, which has been around for more than 70 years, was originally instituted to suppress illegal gambling, Cortez Masto’s office said. It also includes a $50 annual “head” tax per employee in the sports betting businesses.
Hyde-Smith said the proposal would level the playing field, boost local economies and ensure that gaming revenues stay local, supporting jobs and community investments.
Kornegay said the proposal Wednesday in the Senate was a pleasant surprise — he had no idea Cortez Masto was advocating for the industry.
Sportsbooks are additionally taxed by Nevada between 3.5% and 6.5% — the topping-out rate for gross gaming revenue exceeding $134,000 monthly, according to the American Gaming Association.
“Whenever you can reduce taxes or eliminate taxes on an operator, it is certainly a good thing,” Kornegay said. “That’s a tremendous expense for us, and to eliminate it, we would certainly benefit.”
Some gamblers incorrectly assume the vig — short for vigorish, or the fee charged — on wagers is used to pay expenses such as taxes, he said. Most games are listed at minus-110 odds, meaning wagering $110 to win $100 with the excessive $10 serving as the fee.
But the vig, he explained, is the slight edge in favor of the house that’s also present in other casino games likes slots or tables. The hold percentage — the money casinos profit — varies from game to game, according to a study from the Center for Gaming Research at UNLV.
Using data over 20 years through 2024, researchers found the hold was 19% on average for roulette, 14% for craps and 13% for blackjack.
The study didn’t have data for sports wagering, though Kornegay says it averages between 5% and 6% — or the lowest hold in the casino. That’s why not having the handle tax would be beneficial to the business model, he said.
“What’s been happening over the last five years is that operating a sportsbook has become very expensive, “ Kornegay said.
A ruling in 2018 by the U.S. Supreme Court paved the way for the expansion of sports wagering in the United States. It’s now legal in 28 states and Washington, D.C.
“This antiquated tax puts legal operators at a competitive disadvantage and rewards illegal offshore bookmakers that pay no federal or state taxes, offer no responsible gaming tools, and have no systems in place to prevent underage customers from using their platforms,” Bill Miller, president and CEO of the American Gaming Association, said in a statement.
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