States are beginning to recognize how much promotions are costing them in taxes and beginning to ban sportsbooks from using them as tax write-offs.
Promotions have hurt the sportsbooks themselves as well, with many of the top brand’s stock prices plummeting as a result.
LAS VEGAS – By the end of the year state-sanctioned sportsbooks such as DraftKings, FanDuel and BetMGM are all expected to significantly reduce or outright get rid of, many of their top promotions.
The promotions are likely safe until 2023 due to expiration dates attached to many of the bonuses, but with the promotions hurting both the sportsbooks themselves and many states’ tax situation, it is hard to envision the state-regulated books offering promotions that can compare to the internationally regulated books.
How Promotions Have Negatively Impacted States
Up until recent legislative changes made in Colorado and Virginia, nine states had been allowing sportsbooks to count promotions as write-offs in their taxes.
The thought process was based on the sportsbooks trying to gain a foothold in the market, but many states underestimated just how much that would cost them in terms of taxable revenue.
Including the taxes lost to promotions in Colorado and Virginia, the nine states that allowed promotions to get written off had lost nearly $254 million in tax revenue.
Broken down by state, Pennsylvania lost the most in taxes.
Tax Lost To Promotions
How Promotions Have Hurt Sportsbooks
Promotions have proved to be an excellent tool for sports betting sites to bring in players, but that execution has not helped companies make money.
In fact, the majority of the most popular state-regulated books either have or are going to, overhaul their business models.
Some plan on overhauling their models by way of less spending on advertisements, while others focus on limiting promotions. In all reality, most sports betting companies are likely to do a little bit of both.
Based on how poorly many legal sportsbooks have performed on the stock market since the first trading day of the year, January, 3, changes are clearly necessary.
News tags: BetMGM | Caesars | Colorado | DraftKings | FanDuel | Virginia
Brett is a passionate sports writer who majored in Sport Management at Florida State University. He combines his knowledge of stats with his understanding of game theory to find the best values when sports betting. Brett enjoys golfing, playing cornhole, and hanging out by the pool when he’s not locked in watching games.