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Massachusetts regulators remained undecided Monday (December 12) on whether to allow operators to deduct promotional play from taxable revenues when the state’s sports-betting program launches in 2023.
A majority of the five-member Massachusetts Gaming Commission said they were not sure whether the commission should enact a policy that permitted deductions, despite legislators not acting on the issue in the legislation approved in August.
Following a presentation on the topic from outside legal advisor Anderson & Kreiger, commission chair Cathy Judd-Stein argued against the provision, arguing that legislators made their intent on the issue clear when they did not include language regarding the provision, despite the state's House of Representatives including promotional play deductions in its bill passed in 2021.
The Senate did not include such language and the reconciled version of the bill ultimately omitted wording that would have permitted the deductions.
“The House language was clear, promo play was to be deducted, the Senate thought otherwise,” Judd-Stein said. “And ultimately, the bill that was signed into law by the governor reflected the position that the Senate took.”
“I feel as though our lawmakers’ intent is clear,” she continued. “They weighed the relevant factors including impact on tax revenues, impact on the operator’s business model … how their decision may affect the paramount goal of shifting Massachusetts residents to a regulated sports wagering platform out of the shadows of illegal betting, and they weighed the effects of promo play on vulnerable populations, particularly those at risk of problem gambling.”
Commissioner Eileen O'Brien agreed with Judd-Stein’s assessment that legislators had heard lobbying from operators to include a provision and still declined to do so.
“They know how to lobby and advocate for themselves. I'm sure they made all these arguments to the legislature,” O'Brien said. “And the legislative history would appear to establish that the legislature ultimately, when they came out of committee, were not persuaded.”
However, the three remaining commissioners — Nakisha Skinner, Bradford Hill and Jordan Maynard — said they remained undecided on the issue, leading to the question being tabled for a future meeting following Monday’s discussion.
“While I do give great weight to the legislative history that's been presented … I have to believe that if the legislature chair did not intend to defer this question to the commission, then they would have specifically excluded the deduction of promotional play in their legislation,” Skinner said.
“Ultimately, I am concerned about the tax implications for the Commonwealth if we were to include promo play as a deduction,” she added. “But I think there are strong arguments, both for and against here.”
Hill, a former House member who supported the 2021 package, said House members were convinced that the provision would help the new businesses entering the state for their launch.
“There was a lot of horse trading going on on that last day, to get this bill to the governor's desk,” Hill said. “And I think during those discussions, and during that horse trading, that the House gave up a lot of what it would have liked to have seen in the bill to get the bill to the governor's desk.”
Lon Povich, an attorney with Anderson & Kreiger, said that, ultimately, either side of the argument could be defended legally, but the firm believed that rejecting promotional play deductions was the better course.
No timetable has been set on when the commission will consider the promotional play question, but the commission will continue its busy month Tuesday with a hearing that includes presentations from WynnBET and Caesars Entertainment regarding their applications for a mobile sports-betting license.
On Wednesday, the commission is set to hear an application from BetMGM that could also include a vote on the land-based application for MGM Springfield, which the commission deferred a vote on following a presentation last week.
Finally, the commission will hold hearings next week to consider the online applications of Penn Entertainment and Fanatics for their online sportsbooks. The commission tabled Penn’s application among concerns over the Barstool Sportsbook brand and potentially advertising to underage children.
