Virginia’s latest biennial budget accomplished what legislation could not this year: an end to unlimited promo deductions for VA sportsbooks.
The language instead made its way into the biennial budget and went into effect July 1, Virginia Lottery Deputy Director of Gaming Compliance Gina Smith said at Wednesday’s board meeting.
That means the operators that launched in Virginia before June 30, 2021, are now on the hook to pay taxes on those promotional dollars. Virginia is the second state to cut promo deductions this year after Colorado‘s legislature passed a change in May.
Which VA sportsbooks can no longer deduct any promo costs?
There are seven operators that can no longer deduct promos from taxable revenue:
Penn National’s Barstool Sportsbook is the next to pass its one-year anniversary Aug. 10.
The new budget language did not change the rule that allows operators to roll a monthly loss over to the next month.
Unlimited promos have eaten into tax revenue
The state’s 14 mobile operators have paid just $33.7 million in taxes from January 2021 through May 2022 despite the state’s 15% tax rate.
If that 15% taxed gross sports betting revenue instead of adjusted revenue, operators would have instead paid $69.7 million through May.
FanDuel leads handle, BetMGM leads promos
The Virginia Lottery did not include June figures in the sports betting presentation. That means there was only an additional two months of information compared to the update at the last VA Lottery Board meeting.
|Operator||Jan-May Handle||Jan-May Market Share||Q1 Market Share||Jan-May Promo Deductions|
FanDuel was the only operator to see handle share move more than a point, gaining 1.06 percentage points over the first quarter to lead the state with 40.97% share from January through May.
FanDuel also increased its share of promotional deductions by 3.8 percentage points compared to the first quarter. That is still only good for second best, though, as BetMGM holds a 37.1% share of all promo deductions for 2022.