Deducting promotional spending from taxable revenue evolved this year into something that comes up every time a sports betting bill is discussed.
Some states allowed for significant deductions when they passed their bills, including Colorado and Virginia. But both states since changed their rules in the past year and saw tax revenue increase, which could convince other states to change their ways.
The first month of limited promotions for Virginia sportsbooks could at least encourage legislators in promo-rich states thinking about a change.
Sports betting tax revenue jumps for Virginia
Virginia is still about two months away from showing the true impact of its policy change. September’s results, which will show what limited promos in Virginia looks like with NFL betting, will not be available until November.
July’s results are promising, though. Despite revenue increasing over June just 0.2% to $26 million, tax revenue increased 63.5% to $3.1 million. That is with handle falling 9.9% to $266 million compared to June.
Those increases came as seven operators could no longer deduct promotions from their taxable revenue with the new 12-month limit in effect. That meant there were only six operators that could deduct bonuses for a total of $396,903 deducted. Compare that to the $7.8 million deducted in June.
September’s result should be even more striking as long as favorites do not crush the hold. Operators deducted $17.4 million in promo costs last September, dragging taxable revenue down to $10.3 million.
More states could follow suit
Regulators in Massachusetts could be paying close attention to Virginia as they consider whether to allow promo deductions. Legal betting jurisdictions both old and new could also learn something from Virginia’s change of heart.
Pennsylvania, for example, has the second-highest effective tax rate in the US of 36%. Tax revenue since launch in November 2018 is $282.8 million, but without promo deductions, that number would be $420 million.
Arizona felt the promo pinch in its first month last September. Operators deducted every dollar of the $31.2 million in mobile taxable revenue for the month, leaving the state with just over $31,000 in tax revenue from retail operations.
Arizona has limits on its promo deductions but even those might be too generous. Operators can deduct up to 20% of gross revenue in the first two years, 15% in year three and 10% for years four and five.
FanDuel renews with WNBA
FanDuel Sportsbook renewed its agreement with the WNBA, and is an official sportsbook and fantasy partner of the league.
The agreement includes footage rights for FanDuel’s new TV network as well.
Interest in the WNBA has been rising among sports bettors, according to FanDuel, especially at its retail books. Total bet count is up 270% with handle up 101% for WNBA betting at its retail locations.
Kambi strengthens sports betting offering
Bringing sportsbook technology in-house has been a recent trend. Kambi, one of the most well-known B2B betting platform suppliers, sweetened its offering last week to help stop the bleeding.
Kambi bought Shape Games for up to €78.1 million in cash with €38.5 million paid up front and the rest in potential earnouts. The company focuses on customer engagement and retention with customizable front-end technology.
The acquisition will “significantly enhance Kambi’s capabilities in the mobile space,” the company’s release said. The two have worked together before and already serve Kambi partners JACK Entertainment and BetWarrior.
Shape Games generated €2.8 million in EBITDA on €7.6 million in revenue in 2021. The company forecasts 100% growth for 2022.