Earlier this week, the Massachusetts Gaming Commission voted unanimously to include promotional play bonuses in the calculation of taxable revenue for sports betting operators.
That means Massachusetts online betting apps cannot deduct wagering promos from taxable income. Instead, they will have to include promo play expenses in their earnings when determining taxes for the state.
But what does it mean for Massachusetts sports bettors? Let’s take a closer look.
Influence on Massachusetts gamblers
Since the introduction of online sports betting in Massachusetts, MA sportsbook bonuses have been prominent on every platform. Sportsbooks often use promotional offers to entice new users, which can include second chance bets, odds boosts, cash matches, and more.
By offering attractive welcome bonuses, sportsbooks can attract a larger customer base that, after absorbing promotional losses initially, can eventually generate more revenue for the operator. Absorbing those losses is more manageable when the sportsbook can deduct promo credits from their taxes.
However, some bettors may fear that MA sportsbooks could limit their promos since the MGC’s policy of not allowing promotional tax write-offs is set in stone. But that likely won’t be the case.
In the long run, sportsbooks will still turn a profit and offer bonuses to both new and existing customers. For example, Ohio banned promotional write-offs, but betting platforms still offered generous welcome bonuses when the market went live earlier this year. Additionally, Ohio sportsbooks still provide ongoing bonus promotions that are not any different from what those sportsbooks offer in other states.
Since the introduction, MA sportsbooks have been paying taxes on promotional play expenses. In April, the state collected $11.7 million in taxes from MA online sportsbooks, according to $58.5 million in taxable gaming revenue.
Therefore, the sportsbooks will be fine in the long run. While there may be a slight decrease in MA promos compared to other states, it won’t be noticeable to the average sports bettor.
Consider this: Massachusetts sportsbooks have never been able to deduct promo credits from their taxes. Nothing changed with the MGC’s decision this week. Have you seen any significant rumors or complaints about small bonuses in the Bay State?
Neither have we.
Countrywide trends regarding sportsbook taxation
In a submission to the MGC by Connor Loughlin and Theresa Merlino of financial consulting firm RSM, data was shared that illustrated the national trends regarding gambling taxation.
States vary in how they handle sportsbook promo rebates. According to RSM, 22 states that have legalized gambling require promotional play to be included in taxable income. Several more require a portion of promotional play expenses to be included.
Commissioner Mike Hill noted that gambling operators are not requesting for promotional play to be excluded.
“I have not heard from any of the operators, and (the MGC has) not received any correspondence from them requesting this to be changed. So, it should not be a problem. If they aren’t asking for assistance, then it doesn’t seem to be an issue,” Hill said.
Worry about likely increase in trouble gambling
Office Eileen O’Brien expressed concerns that allowing rebates for promotional play may contribute to an increase in problem gambling. Responsible gambling in Massachusetts has been a consistent focus for the MGC since the industry went live.
“I have a belief that any type of rebate for promotional play is likely to lead to an increase in the promotions of the promotional plays, which could have (a responsible gambling) impact,” O’Brien said.
O’Brien has been a staunch opponent of allowing deductions for promotional play expenses. She has also shared her concerns regarding the number of commercial advertisements featuring promotional enticements.
Of the tax revenue collected from sportsbooks, Massachusetts allocates 9% to its Public Health Trust Fund and responsible gaming programs. While there have been no studies to prove that an increase in promotional play expenses leads to higher incidents of problem gambling, O’Brien has suggested that it could be the outcome.
SIMILAR: MA Sportsbooks Granted More Time To Add Various Responsible Gambling Options
If you or a loved one is experiencing difficulty with gambling, call 1-800-327-5050 or visit www.mahelpline.org/problemgambling to speak with a trained specialist for free, 24/7.
Dan Holmes is a Staff Writer for PlayMA with plenty of experience under his belt. Dan has written three books about sports and has previously worked for the National Baseball Hall of Fame and Major League Baseball. He also has extensive experience in the launch of sports betting in other states, including Ohio and Maryland. Currently, Dan is residing in Michigan with his family.
