Massachusetts sportsbook promo credit deductions remain up for debate

Massachusetts sportsbooks promo deductions
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After a lengthy debate and an unusual split vote, the Massachusetts Gaming Commission has decided it has the latitude to choose to allow promotional credit deductions for sportsbooks’ revenue reports in the Commonwealth.

The commissioners were split on whether or not the language in the law allowed them to decide if there were promotional credit deductions or not. Here is the relevant language from the bill:

“The commission shall levy and collect all fees, surcharges, civil penalties and taxes on adjusted gross sports wagering receipts imposed by this chapter, except as otherwise provided under this chapter.”

The law defines “adjusted gross sports wagering receipts” as:

“The total gross receipts from sports wagering less the sum of: (i) the total of all winnings paid to participants; and (ii) all excise taxes paid pursuant to federal law; provided, however, that the total of all winnings paid to participants shall not include the cash equivalent of any merchandise or thing of value awarded as a prize.”

Legal consultants for the MGC recommended an interpretation of this that concluded the commission does not have the power to decide to allow for promotional credit deductions, it isn’t stipulated in the law that promotional credit deductions are allowed, and thus there should not be promotional credit deductions.

Chairwoman Cathy Judd-Stein and Commissioner Eileen O’Brien agreed with this interpretation of the text. However, there was not consensus among the group.

Commissioner Bradford Hill, who served in the Massachusetts legislature prior to being appointed to the MGC, brought perspective from the floor, noting that the House passed a version with promotional credit explicitly stated before the bill was edited in the Senate.

Commissioner Jordan Maynard, an attorney by trade, stated he reviewed other cases with similarly vague language and did not agree with the interpretation provided by legal counsel. Commissioner Nakisha Skinner was also on the side that the commission had the latitude to make this decision.

Judd-Stein attempted to state the issue was resolved and there was no room to debate promotional credit. Maynard then called for a vote on the topic, which split 3-2 that the commission has the ability to decide whether or not sportsbooks could deduct promotional credit.

While the commissioners voted they have the ability to decide the promotional credit issue, the votes will not necessarily fall the same way on whether or not they should allow operators to deduct promotional credit. In past meetings, MGC staffers have shown the commissioners a few options for promotional credit schemes, including full deductions, no deductions, and a compromise where deductions are capped.

Promotional credit deductions have been a hot topic as of late, especially after a New York Times story indicting the practice. Maryland’s first full month of online sports betting revenue produced a mere $45,000 in tax revenue despite almost half a billion in handle because of extensive promotional deductions.