When Virginia approved sports betting, sportsbook operators deducted the cost of promotion from the tax bill. The result was that some operators paid no tax from the revenue they brought in. Some legislators said the state was effectively subsidizing sports betting companies. They changed the law and prevented firms from deducting the promotions.
Revenues for the state jumped up. No surprise there.
The sportsbook operators said this would decrease the long-term potential, making it more difficult to retain existing customers and find new ones. Now the momentum has shifted again in the Legislature. A new bill would restore the tax deduction for promos, but not beyond 1.75 percent of total wagers.
Virginia lawmakers are considering restoring part of the tax deduction for sports betting apps in a proposal that would bring back write-offs for free-bet promotions. The possibility is one the state’s gaming industry has been pushing for some time now, as reported in the Virginia Mercury.
Lobbyist Bea Gonzalez, who represents the Virginia Sports Betting Alliance, told lawmakers at a committee hearing the group only sought a portion of the deductions back. Like meeting in the middle.
The proposal keeps an existing regulation which permits promotional costs to be deducted from the liability during the first year of operation, a chance to give new licensees a better opportunity to get a handle on their business.
The legislation passed the state Senate 31-7-1, but the House Appropriations Committee blocked it twice. There is still a chance the proposal could make its way through the budget process as lawmakers negotiate the final spending plan.
