--- kind: "section" citation: "26 U.S.C. § 4402" title: "26" title_heading: "Internal Revenue Code" number: "4402" heading: "Exemptions" release: "119-102" date: "2026-07-12" url: "https://uscodex.org/usc/26/4402" units: - "Subtitle D — Miscellaneous Excise Taxes" - "Chapter 35 — Taxes on Wagering" - "Subchapter A — Tax on Wagers" --- # §4402. Exemptions No tax shall be imposed by this subchapter— - (1) **Parimutuels—** On any [wager](/usc/26/4421.md?p=1) placed with, or on any [wager](/usc/26/4421.md?p=1) placed in a wagering pool conducted by, a parimutuel wagering enterprise licensed under [State](/usc/26/4482.md?p=c-1) law, - (2) **Coin-operated devices—** On any [wager](/usc/26/4421.md?p=1) placed in a coin-operated device (as defined in [section 4462](/usc/26/4462.md) as in effect for years beginning before July 1, 1980), or on any amount paid, in lieu of inserting a coin, token, or similar object, to operate a device described in [section 4462(a)(2)](/usc/26/4462.md?p=a-2) (as so in effect), or - (3) **State-conducted lotteries, etc.** On any [wager](/usc/26/4421.md?p=1) placed in a sweepstakes, wagering pool, or [lottery](/usc/26/4421.md?p=2) which is conducted by an agency of a [State](/usc/26/4482.md?p=c-1) acting under authority of [State](/usc/26/4482.md?p=c-1) law, but only if such [wager](/usc/26/4421.md?p=1) is placed with the [State](/usc/26/4482.md?p=c-1) agency conducting such sweepstakes, wagering pool, or [lottery](/usc/26/4421.md?p=2), or with its authorized [employees](/usc/26/101.md?p=i-3) or agents. ## Source credit (Aug. 16, 1954, ch. 736, 68A Stat. 525; Pub. L. 85–859, title I, § 152(b), Sept. 2, 1958, 72 Stat. 1305; Pub. L. 89–44, title IV, § 405(a), title VIII, § 813(a), June 21, 1965, 79 Stat. 149, 170; Pub. L. 94–455, title XII, § 1208(a), Oct. 4, 1976, 90 Stat. 1709; Pub. L. 95–600, title V, § 521(c)(1), Nov. 6, 1978, 92 Stat. 2884.) ## Notes ### Editorial Notes ### References in Text Section 4462, referred to in par. (2), was repealed by Pub. L. 95–600, title V, § 521(b), Nov. 6, 1978, 92 Stat. 2884. ### Amendments 1978—Par. (2). Pub. L. 95–600 substituted “(as defined in section 4462 as in effect for years beginning before July 1, 1980)” for “with respect to which an occupational tax is imposed by section 4461” and “(as so in effect), or” for “if an occupational tax is imposed with respect to such device by section 4461, or”. 1976—Par. (3). Pub. L. 94–455, among other changes, substituted in heading “State-conducted lotteries, etc.” for “State-conducted sweepstakes.”, and struck out provision that no tax be imposed on any wager placed in a sweepstakes, wagering pool, or lottery in which the ultimate winners are determined by the results of a horse race. 1965—Par. (2). Pub. L. 89–44, § 405(a), substituted “section 4462(a)(2),” for “section 4462(a)(2)(B),”. Par. (3). Pub. L. 89–44, § 813(a), added par. (3). 1958—Par. (2). Pub. L. 85–859 inserted provisions exempting from the tax amounts paid to operate a device described in section 4462(a)(2)(B), if an occupational tax is imposed with respect to such device by section 4461 of this title. ### Statutory Notes and Related Subsidiaries ### Effective Date of 1978 Amendment Pub. L. 95–600, title V, § 521(d)(2), Nov. 6, 1978, 92 Stat. 2885, provided that: “The amendments made by subsections (b) [repealing sections 4461 to 4464 of this title] and (c) [amending this section and section 4901 of this title] shall apply with respect to years beginning after June 30, 1980.” ### Effective Date of 1976 Amendment Pub. L. 94–455, title XII, § 1208(c)(1), Oct. 4, 1976, 90 Stat. 1709, provided that: “The amendment made by subsection (a) [amending this section)] shall apply with respect to wagers placed after March 10, 1964”. ### Effective Date of 1965 Amendment Pub. L. 89–44, title VII, § 701(c)(2), June 21, 1965, 79 Stat. 157, provided in part that: “The amendments made by sections 403 [amending sections 4461 and 4462 of this title] (relating to occupational tax on coin-operated devices) and 404 [repealing sections 4471 to 4474] (relating to occupational tax on bowling alleys, billiard and pool tables), and by subsections (a) [amending this section], (b) [amending section 4901 of this title] and (d) [amending section 4914 of this title] of section 405 (relating to technical and conforming changes) shall apply on and after July 1, 1965.” Pub. L. 89–44, title VIII, § 813(b), June 21, 1965, 79 Stat. 170, provided that: “The amendment made by subsection (a) [amending this section] shall apply with respect to wagers placed after March 10, 1964.” ### Effective Date of 1958 Amendment Pub. L. 85–859, title I, § 152(c), Sept. 2, 1958, 72 Stat. 1305, as amended by Pub. L. 99–514, § 2, Oct. 22, 1986, 100 Stat. 2095, provided that: “The amendments made by subsections (a) and (b) [amending this section and section 4462 of this title] shall take effect on the effective date specified in section 1(c) of this Act [the first day of the first calendar quarter beginning more than 60 days after Sept. 2, 1958]. In the case of the year beginning July 1, 1958, where the trade or business on which the tax is imposed under section 4461 of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] was commenced before such effective date, the tax imposed for such year solely by reason of the amendment made by subsection (a)— shall be the amount reckoned proportionately from such effective date through June 30, 1959, and shall be due on, and payable on or before, the last day of the month the first day of which is such effective date.”