Derek Stevens has a knack for marketing. The Las Vegas businessman is best known for revitalizing Sin City’s Fremont Street district with his billion-dollar Circa Resort and Casino, giving downtown Vegas a Strip-like destination. Now, though, he’s setting his sights on making a change he says the sports betting industry needs.
The CEO of Circa, which also operates the Circa Sports sportsbook, told BetKentucky.com - your home of Kentucky sports betting news - during an interview in Las Vegas last month that he wants to see something rebranded. No, he wasn’t talking about changing Barstool Sportsbook to ESPN BET. Instead, he wants to change the name of the excise tax the federal government places on each legal sports bet placed in the U.S.
Congress created the tax more than 70 years ago to help fund law enforcement to investigate and prosecute violators of gambling laws. When first enacted, the tax was 10% of the handle, the total amount wagered. Since then, lawmakers have reduced it a couple of times. Most recently, in 1984, lawmakers set the rate at .25%. Licensed sportsbooks must also pay a $50 per person fee each year for each employee responsible for taking bets.
A quarter for every $100 wagered doesn’t sound like much. However, U.S. sportsbooks took $93.2 billion in bets in 2022, which means the excise tax generated about $233 million. That figure will surely increase in 2023 as more states - including Kentucky - have legalized sports wagering.
‘Illegal Bookmaking Preservation Tax’
Rather than fighting illegal gambling, Stevens counters it does the opposite, as unlicensed books do not pay that tax. He and other Circa executives have talked with American Gaming Association President and CEO Bill Miller about the tax, and the AGA has long advocated for its repeal.
“When they hear excise tax in sports betting, most people kind of blow it off, not really understanding what it is. Effectively what it is - and you can use this as a quote, I want this term to be used - this is the illegal bookmaking preservation tax,” Stevens said. “The only thing the excise tax does is it harms legal bookmakers and ensures the going concern and longevity of illegal bookmaking.
“This is why this federal excise tax needs to be eliminated. It’s come up a couple of times, but it never got through here. This tax, it really needs to be marketed differently.”
The excise tax is a concern for licensed sportsbooks because offshore and illegal operators have lower overhead costs since they do not pay it. That means they can offer better odds to players. It’s an issue for Circa because its sportsbook caters to players seeking higher limits.
“A sharp player or a large dollar player have reasons why they would want to bet with someone that uses our business model,” Stevens said. If you’re a large player, you got to worry about your money offshore. Is there going to be a Black Friday coming up?
“How much are you willing to keep offshore in illegal accounts? So, I think, with this model that we’re using, taking larger bets, working with sharps, we’re trying to eliminate some risk for some of the sharps because you know the money’s going to stay onshore.
We’re regulated in a manner that we guarantee the funds are there.”
Why Circa’s Coming To Kentucky
Circa is live in Nevada, Colorado, Iowa, and Illinois. It’s a licensed KY sports betting operator and plans to launch its online Kentucky sportsbook app later this year. Circa also intends to open a brick-and-mortar sportsbook sometime next year at Kentucky Downs, a thoroughbred track in Franklin on the Tennessee border.
Stevens said Circa looks to expand into new states with regulatory structures that align with the company’s business model. He also believes Circa can pull bettors from neighboring states like Indiana, Ohio, and Tennessee to make their way to Kentucky.
“Location-wise, I’m pretty excited,” he said. “With its kind of central Midwest location, it’s geographically a great location for us getting into our fifth state.”
Follow BetKentucky.com for the latest and best Kentucky sportsbook promos. We will continue to keep you up to date on the most recent sports betting news.
