For Now, Sportsbooks Can’t Write Off Promo Credits In Massachusetts

As of now, Massachusetts sports betting regulations do not allow online sportsbooks to deduct promotional credits from their state tax filings. Nevertheless, this situation might undergo a transformation as the market progresses.

On Thursday morning, the Massachusetts Gaming Commission disclosed this information during a public meeting. The commissioners have decided to seek feedback on the matter of promotional tax deductions in the upcoming weeks. Following this, they will gather again to evaluate and potentially modify policies accordingly.

The treatment of sportsbook promo deductions differs among states. In certain states, sports betting apps have the freedom to deduct the various promotions they offer, such as bonus bets, second chance bets, and deposit matches, without any limitations. However, other states impose restrictions on sportsbooks, allowing them to write off only a specific percentage of their monthly handle or limiting the time frame during which they can write off promo credits.

Why MA apps can’t write off promo credits

In January, the MGC made a 3-2 decision stating that the statute concerning promotional tax write-offs was sufficiently unclear, giving the commission the power to determine the appropriate action. However, no decision was made at that moment regarding the course of action. As a result, the existing interpretation, which prohibits MA online sportsbooks from deducting bonuses and promotions from their state taxes, continued to be upheld.

Commissioner Jordan Maynard expressed his belief that the deduction should likely not take place.

In contrast to an all-or-nothing strategy, the majority of states that have legalized sports betting adopt different approaches when it comes to promotional write-offs. For instance, Ohio, which recently introduced sports betting on January 1st, will permit sportsbooks to deduct promo credits starting from 2027. Conversely, Virginia allowed its sportsbooks to deduct promotional bets for only the initial 12 months following its launch.

RELATED: Learn how different states utilize tax write-offs for promotional credits.

Colorado, along with other states, has implemented percentage limits for sportsbooks. As of January 1st, sportsbooks in Colorado were restricted to deducting only 2.5% of their monthly handle. This deduction rate will gradually decrease until July 2026, at which point it will remain steady at 1.75%.

Cathy Judd-Stein, chairperson of the MGC, expressed that the ongoing dialogue throughout the country is highly flexible. She highlighted the advantageous situation of being able to gain insights from other states at present.

Impact of promo write-offs on tax payments

The MGC is looking forward to receiving feedback on promo credit tax write-offs from various entities, including the Attorney General’s office, treasurer, governor’s office, operators, RSM US (an audit tax consulting firm), and responsible gambling representatives.

Commissioner Brad Hill extended an invitation for interested parties to engage in a roundtable discussion on the topic.

He mentioned that it is a significant concern from which we can anticipate receiving an abundance of information.

Massachusetts sports betting tax payments will be greatly influenced by the commission’s ruling on promo write-offs. Play MA estimates that in a fully developed market, annual taxes would amount to $87 million if write-offs are not permitted, whereas it would reduce to $56 million with write-offs.