The Massachusetts Gaming Commission voted unanimously Tuesday to continue taxing sports betting operators on revenue generated by promotional play. Though the state’s sports wagering regulator has not been allowing tax deductions for promotional play, it stated previously it would keep the discussion open.
Tuesday, the MGC brought further clarity to operators doing business in the state by voting 5-0 against promotional play tax deductions. Prior to the vote, the group examined tax revenue data from a few states to compare the costs and benefits of promotional play deductions.
Additionally, the MGC briefly went into closed session to discuss the topic with RSM, an auditing company that analyzed financial data related to promotional play measures.
Commissioners in agreement
Often, MGC commissioners embark on lengthy debates about topics with a wide range of opinions. That wasn’t the case Tuesday, as the commissioners were in agreement that promotional play such as bonus bets should be taxed. They cited a few reasons, including a belief that it was what the state legislature wanted when it legalized sports betting.
“In short, I believe that the legislature intended to include promotional play within a sports wagering operator’s gross wagering receipts,” Commissioner Jordan Maynard said.
Maynard was firm in his belief that the MGC should finalize a decision on the topic Tuesday instead of prolonging further discussions.
“I’m content with ending … what seems to be perpetual promotional play discussion and give some stability to the operators,” Maynard said.
Some commissioners were concerned about a potential increase in advertising if promotional play received a tax deduction. Others worried about the possible loss of short-term tax revenue.
Sports betting operators typically like when a state offers the tax deduction, often citing a desire to use numerous promotional wagers to entice bettors onto legal, regulated platforms. Despite that, Commissioner Brad Hill said he hadn’t heard complaints from the mobile sportsbooks operating in Massachusetts about the current tax setup.
“If it was such an issue, I would have thought it would be a huge outcry from our operators,” Hill said. “I haven’t heard a peep from any of them in regard to this.”
Waivers for tech upgrades granted
Most of the state’s mobile sports betting operators (Barstool Sportsbook, BetMGM, Betr, DraftKings, Fanatics, FanDuel, and WynnBET) requested waivers related to a specific regulation about play management systems. Massachusetts regulations include responsible gambling measures that require sportsbook operators to allow various voluntary options for bettors who want to limit their wagering.
These features, which include detailed enrollment protocols and elements such as reminders when a player is close to reaching their imposed betting limitation, require software enhancements from operators. The operators requested additional time — the exact requests and timing varied slightly among the operators — to ensure they could properly comply with the regulations.
The MGC took no issue with the requests and granted the waivers.
“I think [they’re] reasonable requests,” said Bruce Band, the MGC’s director of sports wagering. “Anytime you put a new thing into software it can cause problems, so I would rather have these all work properly and not have any issues with their current software.”
Violations addressed Monday
It’s a busy early week for the MGC, which also met Monday. At Monday’s meeting, the MGC discussed DraftKings violations related to tennis wagering, and it expects to hold a hearing at a later date to dive deeper into the violations and consider possible punishment.
In March, DK accepted nearly $8,000 worth of wagers on a tennis league unauthorized by the commission.
“We just really need to make sure that operators know this is something that the commission takes very seriously.” — said MGC Chair Cathy Judd-Stein.https://t.co/3XJRvBXujM
— Sports Handle (@sports_handle) May 22, 2023
Also at Monday’s meeting, the MGC’s Investigations and Enforcement Bureau assessed MGM Springfield a $45,000 civil administrative penalty. The penalty, which MGM Springfield agreed to pay, was a result of incidents in which people younger than 21 gained access to the gaming floor from June through December of 2022.
“We appreciate that MGM Springfield self-reported many of these instances and their ongoing cooperation to put enhanced practices into place to prevent similar incidents in the Future,” IEB Senior Enforcement Counsel Kathleen Kramer said in a statement. “The IEB will continue to monitor MGM Springfield’s compliance with the gaming laws and regulations and the remedial steps they have undertaken.”
