Under current interpretation of Massachusetts sports betting regulations, online sportsbooks cannot write off promotional credits when filing their state taxes. However, that could change as the market evolves.
That revelation came Thursday morning during an open meeting of the Massachusetts Gaming Commission. Commissioners agreed to invite commentary on the topic of promo tax write-offs in the coming weeks. After that, they’ll reconvene on the issue to adjust policies, if necessary.
States vary in how they handle sportsbook promo deductions. Some states allow sports betting apps to deduct the promos they give out — bonus bets, second chance bets, deposit matches, etc. — without limit. Others, meanwhile, restrict sportsbooks to writing off only a certain percentage of monthly handle — or to writing off promo credits only for a certain amount of time.
Why MA apps can’t write off promo credits
In January, the MGC voted 3-2 that the statute regarding promo tax write-offs was ambiguous enough that the commission had the authority to decide what to do. There was, however, no vote regarding what to do at that time. Instead, the status quo interpretation — that MA online sportsbooks cannot deduct bonuses and promos from their state taxes — remained in place.
“I probably think it should not be deducted,” commissioner Jordan Maynard said.
Most states with legal sports betting don’t take an all-or-nothing approach with promo write-offs. Ohio, for instance, which launched sports betting Jan. 1, will begin allowing sportsbooks to write off promo credits in 2027. Virginia, on the other hand, only allowed its sportsbooks to deduct promotional bets in the first 12 months after launch.
Other states, like Colorado, are setting percentage limits. Beginning Jan. 1, Colorado sportsbooks were only able to deduct 2.5% of their monthly handle. That rate will continue to decrease until July 2026, when it will stay at 1.75%.
“This is a very fluid conversation across the nation,” MGC chairperson Cathy Judd-Stein said. “We are actually in a favorable position of being able to learn from other states at this point.”
Impact of promo write-offs on tax payments
The MGC hopes to receive comment from the Attorney General’s office, treasurer, governor’s office, operators, RSM US (an audit tax consulting firm) and responsible gambling representatives regarding promo credit tax write-offs.
Commissioner Brad Hill invited the possibility of a roundtable discussion on the topic involving interested parties.
“It’s a big issue that we’re going to get a lot of information about,” he said.
The commission’s decision regarding promo write-offs will have a significant impact on Massachusetts sports betting tax payments. According to PlayMA projections, annual taxes in a mature market would reach $87 million without promo write-offs, compared to $56 million with write-offs.