Steve Friess: Federal Bill Sends Money To Fight Problem Gambling

State of Play is a column focusing on the trending stories in the casino and gambling space with sharp and clever insight from senior staff writer Steve Friess. Over his 25-year career, Friess has contributed to publications such as Newsweek, Time, New York Times and more.

It is a remarkably elegant, simple idea. The fact that it has an uphill battle to realization is incredibly disappointing.

This week, the National Council on Problem Gambling touted the first bill introduced in Congress to direct federal funding toward compulsive gambling mitigation and research. It also doesn’t require a new tax.

The measure, introduced in the House by Rep. Andrea Salinas, a Democrat from Oregon, and Sen. Richard Blumenthal, a Democrat from Connecticut, is the Gambling addiction, Recovery, Investment and Treatment Act, or GRIT. It takes half of the 0.25% federal excise tax that’s already applied to the nation’s legal sports betting handle and gives it to the Department of Health and Human Services to spend on combating the growth of problem gambling.

Cole Wogoman, the NCPG’s senior manager for government relations, estimates this would mean more than $50 million, with a quarter of that pot going to the National Institute of Drug Abuse for research. HHS would distribute the rest as block grants to states for addiction treatment and prevention efforts.

The idea here isn’t new. Portions of the federal taxes on tobacco, alcohol and sugary beverages, go to pay for treatment of addictions and diseases that those products inspire. There is no dedicated fund provided by Congress, however, to address gambling problems.

Wogoman tells me:

“We are trying to model the way the federal government looks at some of these other behaviors that, for the vast majority of people can be one safely and responsibly, but that, for some percentage of people, will become a problem or addiction. The way the federal government views those issues and treats them for something we want to see happen with gambling.”

That makes sense, right? Ah, but this might be the argument that kills the whole endeavor.

Trying to make it a bipartisan effort

Wogoman tries to put a good face on it but acknowledges this could be a long, tough fight.

He knows that because in May 2023, the NCPG issued a news release promising that the GRIT Act would be introduced in Congress by the end of the summer. That didn’t happen. He’s vague about why, but it seems obvious he struggled to find lead sponsors.

Instead, the responsible gambling bill didn’t get filed until this week, brought forward in the House by Salinas, a first-term congresswoman, and Blumenthal in the Senate. Typically, bills that are successful come out of the gate with more than one sponsor in each chamber — and usually some semblance of bipartisanship. Here, we have two Democrats, and neither are members of the Congressional Gaming Caucus.

“We’re ready for this bill to make progress at any point, but if it doesn’t, we are ready to continue beating the drum,” Wogoman says. “We view it as a snowballing effort where we’ll gain some more supporters and we’ll make our voice louder. We totally want this bill to be bipartisan. We would love to find members of the Republican Party to get on board. That’s still in process. We’re still working on that meeting with offices explaining the benefits of the bill and how it can affect their constituents back home.”

Yeah, that’s the blueprint for passing just about any piece of legislation on Capitol Hill.

The problem is, the NCPG is up against a roadblock: the American Gaming Association.

AGA wants the federal excise tax repealed altogether

The federal gambling industry lobby quickly issued a statement opposing the GRIT Act. It’s not, it insists, that it opposes funneling money into problem gambling research and treatment.

The AGA wants the federal excise tax repealed altogether. So, no, it is not going to support a way to spend something it doesn’t believe should exist in the first place.

The tax, according to the AGA is a relic of a 1950s effort to give the government a means to prosecute illegal gambling operations. Legal sportsbooks paid the tax; those that didn’t could be charged with tax evasion.

In the new era of online gambling, though, such an approach is meaningless and counterproductive, the group argues. “This antiquated policy puts the nascent legal market at a competitive disadvantage against offshore illegal operators, who do not pay any taxes and prey on vulnerable customers,” says Chris Cylke, the AGA’s senior VP for government relations, in a statement.

Furthermore, the AGA says, federal funding for gambling addiction and research programs is not necessary because the industry is already paying millions in taxes on the state and local levels to fund such efforts. Cylke writes:

“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. Nearly every tax dollar earmarked for problem gambling services comes from casino gaming taxes, including new legal sports betting and iGaming markets.”

A savvy and valiant effort by NCPG

I can see both sides, but is the AGA really saying there’s quite enough money being flung at this problem already? Surely it has noticed it’s getting worse, not better? That whatever’s been happening, it’s not working?

Also, it’s worth noting that the AGA has been beating the drum to repeal the federal excise tax on sports betting for years without success. Most recently, Rep. Dina Titus, a Democrat from Nevada, filed such a measure — the Discriminatory Gaming Tax Repeal Act of 2023 — last March, and even in the anti-tax GOP-run House, nobody has scheduled a hearing.

Wogoman says the NCPG is undeterred. He hopes the AGA comes around, but he’s working to go around their opposition.

“The goal here is to just keep getting supporters behind it, keep expanding on the number of co-sponsors, get our grassroots efforts mobilized, because this isn’t necessarily short game. It might be but it also might be a long game, and we’re ready to go either direction.”

I hope he’s right and there’s an appetite for this. But even if there’s not, it’s a savvy and valiant effort by NCPG. Let’s hope it’s not the last.