Federal Legislation on Problem Gambling Treatment Funding To Be Introduced

Article ByDavid Weir

January 12, 2024

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Posted in: Federal Gambling News, US Gambling News, US Sports Betting News

Federal legislation could be introduced to help tackle problem gambling, if two Democratic congress members can push a new bill through.

The introduction of the Gambling Addiction, Recovery, Investment, and Treatment (GRIT) Act is spearheaded by Rep. Andrea Salinas (D-Oregon) and Sen. Richard Blumenthal (D-Connecticut).

The GRIT Act proposes a novel approach to funding gambling addiction research and treatment without imposing new taxes. Instead, it aims to repurpose half of the existing 0.25% federal excise tax on the entire legal U.S. sports betting handle, channeling those funds into the Department of Health and Human Services (HHS).

This redirection is expected to generate more than $250 million a year, with 25% earmarked for the National Institute of Drug Abuse for research.

The remaining funds would be allocated as block grants to states, aiding in addiction treatment and prevention initiatives. This structure mirrors the funding models used for managing the impacts of tobacco and alcohol consumption.

However, the bill may face challenges. It is not yet clear if the measure has bipartisan support, which is important if it is to pass through Congress. It is also opposed by the influential gambling trade group the American Gaming Association.

Political Hurdles and Addressing the Issue

Despite its innovative approach, the GRIT Act faces an uphill battle in Congress. Initially slated for introduction in mid-2023, the act’s filing was delayed, indicating difficulties in securing lead sponsors.

Adding to the legislative challenges, the American Gaming Association (AGA) has expressed opposition to the act. The AGA’s stance is based upon the act incorporating the federal excise tax on sport betting, of which it has been a long time critic.

The AGA advocates for the repeal of this tax, labeling it as an archaic policy that disadvantages legal sportsbooks against offshore sportsbooks which don’t pay any taxes or adhere to U.S. regulations.

They argue that the tax, rooted in a 1950s strategy to combat illegal gambling, is obsolete in today’s digital gambling landscape.

The AGA contends that the gambling industry already contributes significantly to problem gambling services through state and local taxes. They assert that the record growth of the industry has led to unprecedented levels of investment in support and treatment for problem gambling.

“Our industry’s growth means that there’s never been more attention paid to or money invested in problem gambling support than there is today,” said AGA’s SVP Chris Cylke.

“Nearly every tax dollar earmarked for problem gambling services comes from casino gaming taxes, including new legal sports betting and iGaming markets. We look forward to working with Sen. Blumenthal, Rep. Salinas, and other stakeholders to combat illegal gambling and address problem gambling in ways that do not further enshrine bad tax policy and give criminals a leg up.”

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Support for the Act

As the nation continues with legalization of sports betting, now with open markets in nearly 40 states, Uncle Sam isn’t likely to want to give up its slice of the pie.

The current excise tax takes 0.25% of any wager placed at any legal sportsbook across the U.S.

That’s in addition to any other state and local gambling taxes, license fees, and other revenue sharing agreements operators pay. Although it may not seem much considered per wager, the sports betting excise tax paid the government $500 million in 2023.

However the optics of problem gambling put lawmakers in a tight spot. They want the sports betting businesses’ money, but they also want to look proactive on social issues that betting can cause.

Currently, none of this tax money is earmarked for anything in particular, instead going into the general fund.

Now, two Congress members think they have a way to do a good for society, while placating anti-gambling sentiments and keeping sports betting cash flowing into the federal coffers.

As well as politicians Salinas and Blumenthal, the National Council on Problem Gambling (NCPG) is one influential group that supports the GRIT act.

“The introduction of the GRIT Act is a testament to our shared commitment to mitigating gambling-related harm and addressing the challenges of gambling addiction,” said NCPG director Keith Whyte.

“This landmark legislation sets the stage to significantly bolster gambling addiction prevention, research, and treatment resources and make a positive lasting impact on individuals and communities nationwide.”