Fair Play Enforcement Act
- Sponsor
- Rep. Smith, Adrian [R-NE-3]
- Committees
- Ways and Means Committee (primary)
- Last action
- Oct 6, 2026
Bottom line
The bill seeks to financially penalize colleges and universities for allowing athletes with gambling histories or professional ties to participate in collegiate sports, aiming to preserve the integrity and amateur status of intercollegiate athletics.
What it actually does
This bill amends the Internal Revenue Code of 1986 to impose a new excise tax on eligible educational institutions (colleges and universities) that knowingly permit certain individuals to actively participate in intercollegiate athletic events. The tax rate is applied to the institution's gross athletic receipts and escalates based on the number of violations committed over a six-year period. The specified individuals include those who have placed wagers on intercollegiate athletic events or have professional athletic experience in a similar sport.
Proponents argue
Proponents argue that this bill is essential for maintaining the integrity and amateur spirit of college sports, preventing undue influence from gambling, and clearly distinguishing collegiate athletics from professional leagues. They emphasize the importance of fairness for athletes who adhere to amateur rules and the need to protect the reputation of educational institutions from potential scandals.
Opponents contend
Opponents might argue that the bill places an unfair and potentially onerous burden on educational institutions, requiring them to police athletes' past activities, which could be difficult and costly to verify. They may also contend that it punishes institutions for the actions of individuals, potentially leading to unintended negative consequences for athletic programs, student-athletes, and institutional autonomy.
The bill is very short and straightforward, allowing for a quick and thorough understanding of its core provisions.
Section 2(a), adding new section 4969(a) to Chapter 42 of the IRC.
Imposition of Excise Tax on Athletic Participation Violations
This provision establishes a new excise tax on colleges and universities that knowingly permit "specified individuals" to actively participate in intercollegiate athletic events. The tax is levied on the institution's gross athletic receipts for the taxable year in which the violation occurs, providing a direct financial incentive for compliance.
Supporters argue
Supporters argue this tax provides a strong financial incentive for institutions to ensure compliance with rules designed to protect the integrity of collegiate sports, making them more vigilant in vetting athletes and upholding amateur standards.
Critics contend
Critics might contend that this tax places an undue financial burden on institutions, potentially impacting athletic department budgets and student programs, especially if violations are difficult to prevent or detect without substantial resources.
Tradeoffs
This provision balances the desire to enforce athletic integrity with the potential financial strain on educational institutions and the administrative burden of compliance and monitoring.
Section 2(a), adding new section 4969(b) to Chapter 42 of the IRC.
Escalating Tax Rate for Repeat Violations
The tax rate, referred to as the "applicable percentage," increases based on the cumulative number of athletic participation violations committed by an institution over the current and preceding five taxable years. The rates are 5% for one violation, 10% for two, and 20% for more than two violations, creating a progressive penalty structure.
Section 2(a), adding new section 4969(c)(2) to Chapter 42 of the IRC.
Definition of "Athletic Participation Violation" and Exceptions
An "athletic participation violation" occurs when an institution knowingly allows a "specified individual" to actively participate in an intercollegiate athletic event or competition. Crucially, exceptions are made for practice sessions, appearing on a roster without active participation, or participation pursuant to a court order. An aggregation rule treats multiple violations from the same set of facts and circumstances as one.
Section 2(a), adding new section 4969(c)(3) to Chapter 42 of the IRC.
Definition of "Specified Individual"
A "specified individual" is defined as any individual who has placed any wager with respect to any intercollegiate athletic event or competition, or who has been employed as an athlete by and appeared on a roster for a professional sports franchise with respect to a similar athletic event or competition. These criteria establish who is ineligible to participate without triggering the excise tax.
Section 2(a), adding new section 4969(c)(4) to Chapter 42 of the IRC.
Definition of "Gross Athletic Receipts"
"Gross athletic receipts" are defined as the gross receipts of an eligible educational institution for a taxable year that are attributable to, or derived in connection with, any intercollegiate athletic program of that institution. This definition establishes the base upon which the excise tax is calculated, directly linking the penalty to the commercial scale of an institution's athletic operations.
Multiple athletic participation violations related to individuals who placed wagers (as described in paragraph (3)(A)) stemming from the same underlying set of facts and circumstances are to be treated as a single violation for the purpose of calculating the excise tax.
Section 2(a), new IRC Sec. 4969(c)(2)(C)
Why it matters:This is standard legislative practice for defining the scope of an offense and preventing disproportionate penalties for closely related incidents, aiming to clarify how repeat offenses are counted.
Case for: Proponents would argue this rule prevents excessive punishment for institutions where a single underlying issue, such as a widespread gambling ring involving multiple athletes, leads to numerous individual violations, ensuring a more equitable application of the tax.
Case against: Opponents might contend that this aggregation rule could allow institutions to mitigate penalties for what are, in effect, multiple distinct instances of non-compliance, potentially weakening the deterrent effect of the escalating tax rates.
Estimated impact: This provision could significantly reduce the potential cumulative tax burden for institutions facing multiple, related violations, potentially saving them millions of dollars depending on the scale of their athletic receipts and the nature of the violations.