It looks like the final debate on whether all Virginia sportsbooks can deduct some promotional costs will happen in a budget conference committee.
SB 1142 quickly made its way through the Senate but, on Monday, met the same fate as companion bill HB 2202: a 21-0 vote to table the legislation in the House Appropriations Committee.
That might have ended the conversation on allowing mature Virginia sportsbooks to deduct up to 1.75% of their monthly handle from taxable revenue. The Senate, however, has different plans.
VA sports betting deductions in budget amendments
The Senate passed an amendment on the floor to include the 1.75% deduction for sportsbooks that have been in the market for more than a year in Virginia’s budget.
That is how the promotional deduction rules were changed in the first place. The biennial budget limited promotional deductions to sportsbooks in their first year of operations. Del. Mark Sickles brought the promotional deduction changes as a bill in 2022, and although it was not passed through the legislature it made its way into the two-year budget.
While the budgets are passed on even years, there is an opportunity to amend the budget in odd years. The 1.75% change does not appear in the House amendments for the budget. That means it would be one of the topics for a budget conference committee to settle.
Sickles speaks his mind on proposal
Sickles is also a member of the Appropriations Committee and was the only one to speak on Monday about SB 1142 before the unanimous vote:
There are 16 sports betting licensees. Three of them are before us asking for help to help support their free money, free bets that they give. We gave the industry a 15% tax rate, pretty low tax rate, and these three companies that have 63% of the market really don’t want to pay their 15%.
I just point out that New York has a 51% tax rate and zero deductibility for these free bets. Zero deductibility, 51% tax rate. We have a 15% tax rate and people want us to continue doing that even though we did quite well in this last six months since we changed the policy here in committee and raised as much, which is in our budget, the last six months as we did in the first 18 months.
Assuming Sickles was referring to the most recent data available from the Virginia Lottery, he even sold that market share a bit short. FanDuel (41.08%), DraftKings (23.06%) and BetMGM (18.30%) held the top three spots for market share by handle for January 2022 through November 2022 for a combined 82.44% of the market.
Sickles was on target concerning the recent tax revenue since the switch. From July 2022 through December 2022, the state of Virginia received $36.6 million in tax payments compared to $35.5 million over the prior 18 months.
