DC Bill Proposes 25% Tax on iGaming, Bans Sweeps

A Formal Bid to Legalize DC iGaming

A Washington D.C. councilmember has formally introduced legislation to create a regulated market for real-money online casinos. The "Internet Gaming and Consumer Protection Amendment Act of 2024," introduced by Councilmember Wendell Felder, seeks to authorize and tax iGaming within the District's non-federal lands. The push for a legalized Washington D.C. online casino market is framed as a move to reclaim revenue currently flowing to unregulated, offshore platforms.

According to a letter from Felder, the primary motivation is to establish local control over an existing, untaxed activity. Operators backing the bill estimate that D.C. residents currently spend around $700 million annually on unlicensed iGaming sites. The bill aims to redirect that spending into a taxed and regulated local framework.

"If the activity is already happening, the District should be the one setting the rules, and it should be the one to benefit from the tax revenue generated," Felder wrote in support of the bill.

The Financial Structure: A 25% Tax Rate

The financial core of the proposed legislation is its tax structure. The bill would levy a 25% tax on an operator's adjusted gross internet gaming revenue. Beyond that base rate, operators would also be required to pay a 2% fee to the Office of Lottery and Gaming (OLG) for regulatory costs and contribute another 2% to a community benefits fund. This combined 29% effective rate places the proposal among the higher tax jurisdictions in the United States, comparable to states like Pennsylvania.

If the bill passes, the OLG would be tasked with overseeing the new market. The current draft does not specify a cap on the number of operators that could be licensed, leaving the door open for a competitive environment.

A Direct Ban on Sweepstakes Casinos

A significant component of the proposed iGaming legalization is a clause that would explicitly outlaw sweepstakes casinos. These platforms, which operate under U.S. sweepstakes promotions law, use virtual currencies and are distinct from licensed real-money gambling sites. This bill seeks to eliminate that model from the district entirely.

The legislation proposes fines up to $100,000 for each violation related to offering prohibited dual-currency or sweepstakes-style games. This provision would directly impact the availability of popular platforms like Stake US and Zula Casino for players within D.C.forcing them to exit the market or face significant financial penalties.

The move is seen by industry analysts as a way for prospective licensed operators to clear the field of competitors who operate under a different legal framework. By banning the sweepstakes model, the bill would create an exclusive market for licensed, tax-paying real-money casino companies.

Industry Division and What Comes Next

The proposal has already highlighted divisions among stakeholders. Major sportsbook and casino operators have voiced support, citing the potential for a regulated market with consumer protections. Opponents, however, warn of potential negative social consequences.

"This is like putting Dracula in charge of the blood bank," said Les Bernal, national director of Stop Predatory Gambling, expressing concern over the potential for increased addiction and financial harm.

Should the bill be enacted, the path to launch could be relatively swift. The bill text suggests a go-live date within 180 days of the OLG finalizing its regulatory systems. Operators have indicated they could be prepared to launch services in as little as six months. For now, the bill remains a proposal and must move through the D.C. Council's legislative process before any changes take effect.