How a lobbying blitz made sports betting ubiquitous
The association’s consultants predicted, for example, that Virginia could expect to collect an additional $57 million a year in tax revenue if it legalized mobile sports betting and implemented a 15 percent tax rate. That’s what Virginia did, but in the last 12 months of betting, the state only collected $38 million.
Other states with large deficits include Connecticut, Michigan, West Virginia and Wyoming. Overall, in the 14 jurisdictions that allow mobile sports betting and have tax rates in the range expected by the gambling association, tax revenue over the past 12 months has been nearly $150 million below the $560 million dollars that the group predicted, The Times found.
The association defended its estimates. He noted that he had sometimes quoted lower estimates of the size of the illegal gambling market. And the group argued that it was too early to say how much would be bet or how much states would collect in taxes in the future and that as the market matured, tax revenue would rise. The association also said some states’ restrictions on college sports betting resulted in lower-than-expected revenue.
But another reason for the shortfall, the group admitted, was that some states granted the gaming industry’s request for a generous tax break.
To attract customers to betting, companies routinely post “free bets” and other promotions that sometimes add up to thousands of dollars. Bettors can use these credits to place bets without putting their own money on the line.
At least seven states, as well as Washington, DC, agreed to allow companies to fully deduct this promotional expense from their taxable income. Several other states allowed itemized deductions.
In Colorado, Michigan and Pennsylvania this year, the free bet giveaways were so generous during February, the month of the Super Bowl, that promotional spending exceeded revenue for many platforms, causing them to compete, at most, to minuscule tax bills that month. , seconds SportsHandle.
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