Proposed Virginia amendment seeks to undo previous promotional change – Basketball Insiders
Senator Jeremy S. McPike has introduced a bill in the Virginia Senate which seeks to undo prior legislation which does not allow operators to deduct any promotions when calculating adjusted gross revenue. The bill has been referred to the Committee on Finance and Appropriations.
SB 1142 Sports betting; adjusted gross revenue seeks to once more allow exclusion from a sports betting operators adjusted gross revenue of all bonuses and promotions provided to bettors as an incentive to place, or as a result of having placed a sports bet thus lowering the state’s tax receipts but increasing operators revenue.
The proposed amendment would permit deductions to adjusted gross revenue (on which companies are taxed) to 2.5% of the total amount of all sports betting wagers in 2023-2024, 2.25% from 2024-2025, 2% from 2025-2026 and 1.75% thereafter. The proposal mirrors the changes made in Colorado in May 2022.
The current law, pursuant to the 2022 Special Session I appropriation act states that ‘after the first 12 months of sports betting activity, a permit holder is prohibited from excluding from adjusted gross revenue any bonuses or promotions provided to bettors as an incentive to place or as a result of their having placed internet sports betting wagers.’
Should the amendment pass, all 13 betting companies operating legally in Virginia would be permitted to deduct promotional costs whereas currently only Hard Rock, Betway and SI Sportsbook are eligible to do so.
How much tax does Virginia make from the gambling industry?
Since the ban on promotional deductions came in in July 2022, Virginia has received record tax contributions to the state from the gambling industry. From reported November data, Virginia sportsbooks took $519m of wagers, reporting revenue of $57.5m and tax contributions of $7.8m, a record for the state.
The July budget brought a sudden end to promotional deductions, which have been a hot topic in Virginia for some time. HB 1103 was tabled in February 2022 proposing to ban all promotional deductions and also the carry over of losses on a monthly basis.