Virginia was the most aggressive state to revamp promotional deductions by VA sports betting operators last year, but a new bill prefiled Tuesday aims to undo those changes.
SB 1142 from Sen. Jeremy McPike would allow promotional deductions from taxable revenue for all Virginia sportsbooks beginning this July. That flies in the face of rule changes made in last year’s biennial budget that banned promo deductions for any operator after its first year live.
McPike and his office did not return LSR‘s request for comment.
Details of VA sports betting promo bill
If the text of SB 1142 sounds familiar, that is because it is: it calls for the same limits on promo deductions that Colorado passed in 2022.
There are four tiers covering the next four years and beyond. Operators could deduct no more than 2.5% of their monthly handle from July 2023-June 2024. That percentage drops 0.25 percentage points each year until July 2026, when it reaches its bottom of 1.75%.
This proposal allows promo deductions for all 13 operators in the state plus bet365 whenever it launches. Right now, only Hard Rock, SI Sportsbook and Betway can deduct promo costs from taxable revenue.
With deductions limited, Virginia saw monthly tax revenue of $4 million or more in its last four monthly reports, a mark never hit with unlimited deductions in place.
Proposal likely would lower taxes
Virginia has seen a spike in tax revenue since the new budget went into effect in July. McPike’s bill likely would lead to lower tax revenue every month.
Virginia’s most recent report covers November and its $518.8 million in handle. Based on the scale in SB 1142, Virginia would lose at least $9 million in taxable revenue:
- $13 million at 2.5%, or $2 million in taxes
- $11.7 million at 2.25%, or $1.8 million in taxes
- $10.4 million at 2%, or $1.6 million in taxes
- $9.1 million at 1.75%, or $1.4 million in taxes
For comparison, Virginia only saw $817,857 in deductions for November.
Industry behind VA sports betting bill?
Not many legislators want their states to make less revenue, especially one who worked to pass VA sports betting in 2020. McPike’s House counterpart for that push, Del. Mark Sickles, sponsored a bill in 2022 to end promo deductions with the exact language adopted by the budget.
Orrick lobbyist Michelle McGann registered with the state on behalf DraftKings, Fanatics and FanDuel on Jan. 3. Fanatics did not have a lobbyist last year, while DraftKings and FanDuel both used a different lobbyist.
Orrick partner Jeremy Kudon has been outspoken on the importance of promotional deductions from operators, including on Twitter last year when Sickles’ bill failed.
