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Virginia sports betting operators are moving one step closer to getting some level of promotional deductions when calculating adjusted gross revenue.
Senator Jeremy S. McPike‘s Bill SB 1142 passed the Senate Friday by a vote of 31-7. Sports Betting Alliance spokesperson Nathan Clicksaid:
“We were pleased to see the bill overwhelmingly pass the Senate and look forward to continuing working with the House of Delegates. Promo credits help legal sports betting operators compete with the illicit market, and we are glad to see this progress in the state house.”
In the meantime, the House Appropriations committee tabled companion bill HB 2202, by a 21-0 vote on Friday.
Details of bills SB 1142 and HB 2022
According to the state’s current budget, Virginia operators cannot deduct promotional dollars from taxable revenue after their first year of operation. As the current law, under the 2022 Special Session I appropriation act, says:
“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.”
Both SB 1142 and HB 2022 would let sportsbooks deduct promotional costs up to 1.75% of their monthly handle. That is after the first 12 months of operation.
The amendment would gradually reduce the exclusion from a Virginia sports betting permit holder’s adjusted gross revenue. It would allow deductions to adjusted gross revenue, as follows:
- 2.5% of the total amount of all sports bets placed each month between Jul. 1, 2023 – Jul. 1, 2024
- 2.25% of the total amount of all bets between Jul. 1, 2024, and Jul. 1, 2025
- 2% between Jul. 1, 2025, and Jul. 1, 2026
- 1.75% after Jul. 1, 2026
Virginia sports betting market remains strong
Virginia managed to make a lot of money, even without those deductions. October, November, and December were the first months that the Virginia sports betting market managed to surpass $500 million.
In December, 14 Virginia operators accepted $503.1 million worth of bets. Eight of Virginia’s 14 operators reported a profit, which led to a tax bill of $7 million.
In November, the total tax collected from sports betting was $7.8 million. Meanwhile, Virginia sports bettors gambled $518.8 million.
In October, Virginia collected $528 million from players. As for tax revenue, the state gathered roughly $6.95 million.
From July through December 2022, operators paid $36.6 million in taxes. The handle was $2.5 billion over those six months. That is excellent progress if compared to $35.5 million during the first 18 months of operations.
Sportsbooks reported $50 million or more in revenue from September to December. That is the first time that amount has ever been exceeded.
