After months of debate, Massachusetts gaming regulators closed the door on Tuesday (May 23) on allowing promotional play to be deducted from taxable sports-betting revenues.
The Massachusetts Gaming Commission (MGC) voted unanimously to not allow operators to deduct promotional play, following presentations about the financial and responsible gaming effects of such a policy.
The five-member commission has not permitted the deductions since the launch of sports betting in the state earlier this year but has kept the issue on its agenda as an open discussion.
The state’s legislature did not include promo-play deductions in the final legislation for sports wagering that it passed in August 2022. But it also did not explicitly prohibit it, leaving commissioners split on whether they had the authority to allow the deductions, and furthermore, if they had the authority, whether they wanted to do so.
On Tuesday, each commissioner ultimately agreed to continue along their existing path and give operators a clear picture of what will be expected of them moving forward, with those voting in favor of not allowing deductions including those regulators who had earlier voted that the commission had the authority to permit them.
“In short, I believe that the legislature intended to include promotional play within a sports wagering operator's gross sports wagering receipts on that early August 1 morning,” said commissioner Jordan Maynard, one of the three commissioners to say the group could elect to allow deductions.
“Therefore, I’m content with ending this what seems to be perpetual promotional play discussion and give some stability to the operators.”
“After some reflection, and after hearing the details of what our experts have told us, as a regulator and as someone who’s looking out at this industry and looking out for what’s best for Massachusetts, I think what we need to do moving forward … is send the word to our licensees that you will not get the exclusion, that you will be taxed,” added commissioner Bradford Hill.
“Although I feel as a commissioner that we do have the legal right to make a decision, and I do still believe that in terms of policy, we should move forward with the status quo.”
Commissioner Eileen O’Brien expressed her concern that allowing promo play to be deducted would have an impact on responsible gaming.
“I have a belief that any sort of deduction for promo play would likely lead to an increase in the offerings of promo play, which would have a [responsible gaming] impact,” she said.
“It also would have an impact on the advertising that would then go out into the marketplace, and we have already been receiving quite a lot of feedback in terms of the frustration that people have with the promo play and the advertising that’s already going on in the industry.”