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The first legal sports bets are set to be accepted in Massachusetts on Tuesday (January 31), but one of the most hotly debated issues in the state remains undecided by state regulators as they enter a new phase of the sports-betting conversation.
The Bay State’s three land-based casinos are all set to begin accepting wagers Tuesday morning beginning at 10am EST, the first of Massachusetts’s two-phase sports-betting launch.
The second, the launch of online wagering, is expected to begin sometime in March ahead of the NCAA Men’s Basketball Tournament, but no definitive date has been given.
Although the Massachusetts Gaming Commission (MGC) has been working overtime in recent weeks to issue licenses and adopt regulations governing sports wagering, some key issues remain unresolved as regulators appear publicly split on the issue.
Perhaps the most notable unresolved issue is whether to allow operators to deduct promotional play from taxable revenues.
Legislators passed on expressly including promotional play deductions in the bill that legalized sports wagering in August, and regulators have since been split on whether they even had the authority to allow operators to deduct promotional play, let alone whether they actually wanted to include the deductions.
Ultimately, the commission determined in a rare 3-2 vote, rather than a unanimous show of support, that they had the authority to do so, but have continued to defer a decision on whether to include the language in regulations.
The upcoming decision has a significant impact on both operators and the state.
Massachusetts features a 15 percent tax on retail betting and a 20 percent tax on online betting, the latter of which is equalled or surpassed by only six states.
However, promotional play can significantly hamper tax returns from the early months of sports betting as operators continue to offer aggressive bonuses to capture market share.
In Maryland, which launched sports betting in November and allows uncapped promotional deductions for the first year of a sportsbook’s operations, the state generated more than $82m in gross sports wagering revenue in December.
Without promotional deductions, the state would have collected more than $12m in taxes for the month on mobile bets. However, with operators deducting almost $71m in promotional play from their taxable revenues, the state collected about $45,000 in tax revenues on mobile betting for the month.
The Massachusetts Gaming Commission last week sprinted toward today's launch of legal sports betting by adopting a catalog of approved wagering events, as well as various other rules, including regulations related to advertising.
Comments on various operative regulations, which are in effect on a temporary basis and still pending permanent adoption, are currently being accepted by the regulator.
As things stand, 11 sports-betting operators have received varying levels of preliminary suitability findings from the commission that allow them to receive a temporary license provided they continue to meet the required conditions.
A 12th operator, bet365, had applied for a license through partner Raynham Park, but last week the racetrack announced a new partnership with Caesars Sportsbook instead and bet365 withdrew its application for a mobile betting license tethered to the racetrack.
