Virginia edges closer to once more allowing promotional deductions when calculating adjusted gross revenue
Virginia is a step closer to reintroducing some level of promotional deductions being allowed for the calculation of adjusted gross revenue after Senator Jeremy S. McPike’s Bill SB 1142 passed the Senate by a vote of 31-7.
What does the Virginia bill state?
The bill, introduced in January sought to once more allow exclusion from a Virginia sports betting operator’s 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 current law stipulates that, pursuant to the 2022 Special Session I Appropriation Act, that ‘after 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.’
The amendment will allow 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.
Nathan Click, spokesperson for the Sports Betting Alliance stated: “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 six months where no deductions were allowed, the state made considerably more money from tax contributions. In November alone, the state took tax contributions of $7.8 million from handle of $519m. For perspective, that’s 22% of the total tax generated in the first 18 months of live operation in the state of Virginia.
What’s recently happened in VA?
Recently sports book operators such as bet365 and Betfred have launched in the state as commercial operators partnering with sports entities continue to rise. Betfred has partnered with Loudoun FC, whereas bet365 has covered with Washington Commanders. Both will have advertising material at the respective stadiums, with Betfred also having back of shirt sponsorship for both the home and away kits.
There’s currently no push for online gaming in Virginia, but commercial land based casinos were authorized back in 2020 and a maximum of five will launch in dedicated cities in the near future. That may pave the way for further legislation.
Source: Basketball Insider