On Tuesday, a pair of bills aiming to lower promotional deductions for Virginia sportsbooks moved through their respective chambers.
Both SB 1142 and HB 2022 allow promotions deductions of 1.75% on the total monthly handle after the first 12 months of operation. The change is a reversal from rules adopted last year that banned promo deductions from any operator after its first year live.
SB 1142 from Sen. Jeremy McPike advanced through the Finance and Appropriations Committee by an 11-4 vote. HB 2022 was passed out of the General Laws subcommittee by a 6-2 vote.
Some Virginia sportsbooks can still make promo deductions
Under the current Virginia gaming law, there are only five sportsbooks that can still deduct promo costs:
- Hard Rock – ending March 2023
- SI Sportsbook – ending May 2023
- Betway – ending May 2023
- Betfred – ending December 2023
- bet365 – ending January 2024
For reference, if all operators could deduct promotional costs equal to 1.75% of their handle, the $518.8 million bet in November would mean nearly $9.1 million could be deducted from taxable revenue. In reality, only $817,857 was deducted. As a result, the remaining $8.3 million translates to $1.2 million in tax revenue at Virginia’s 15% tax rate.
Concerns about responsible gambling program
Although Del. Paul Krizek voted to support the amendment changes, questions remain on how things will affect the state’s problem gambling program.
“My understanding is had we not had that, we would have run out of money before the end of last year,” Krizek said.
“So that is really critical. I’m going to support this to send it up to appropriations because I want to see what the fiscal impact is but that’s my concern, that we have enough money for the problem gambling fund.”
At 2.5%, sports betting contributes the highest percentage to the problem gambling fund out of any gambling in the state. Whether each bill makes it all the way to the governors desk remains to be seen.