Massachusetts Senate Rejects John Keenan's Proposed Online Sportsbooks Tax Hike to 51%

Massachusetts lawmakers have decided against increasing the state’s tax rate on sports betting revenue. On Thursday, Sen. John Keenan’s proposal, Amendment 828, was rejected by the Massachusetts Senate. This measure aimed to elevate the tax for online sportsbooks from 20% to a staggering 51%, potentially placing Massachusetts alongside New York with the highest tax rates for sports betting operators in the U.S.

Amendment 828 aimed to modify the Senate’s FY2025 budget plan, which forecasts state tax revenue to be at least $41.5 billion. This projection represents about a $208 million drop from the expected tax revenue for FY2024.

Despite the setback, Sen. Keenan remains determined to push for changes to Massachusetts’s current gaming laws. During a Senate hearing, the Democratic lawmaker expressed concerns about college player prop wagering, a contentious issue among lawmakers and licensed operators across the nation. Keenan also criticized live wagering, describing it as the “crack cocaine of sports betting.”

Preceding Events and Legislative Proposals

Before the rejection of Amendment 828, New York’s.

In addition to online sports betting, Massachusetts also offers retail sports betting, taxed at 15%. If approved, Amendment 828 would have altered the Massachusetts Senate’s FY2025 budget plan, projecting tax revenue to reach $41.5 billion in 2025, a $208 million decline from FY2024 estimates.

Since its launch of regulated sports wagering in 2023, Massachusetts has collected $127 million in tax revenue, according to the American Gaming Association. The state’s active gaming laws require tax revenue from sports betting to be allocated to five separate funds, with the state’s General Fund receiving the bulk of the proceeds. Since 2023, the General Fund has amassed $57.2 million in tax revenue from wagering.

Regulatory and Operator Tensions

A potential tax increase for operators in Massachusetts adds to an already rigorous regulatory process, including a $1 million annual licensing fee and an in-person vetting procedure. Additionally, the state mandates that operators make a good-faith effort to provide advertising for the Massachusetts Lottery while ensuring age-appropriate logo displays. Massachusetts is also one of three states that prohibit credit card deposits for betting.

The discussion of a tax rate hike comes amid rising tensions between operators and the state’s gambling regulator. In March, the Massachusetts Gaming Commission (MGC) began contemplating the implementation of sports wagering limits after a public comment in 2023 questioned whether operators have the authority to limit bettors.

Earlier this week, the MGC held a roundtable discussion on this issue, attended by only one operator, Bally’s, despite multiple invitations. The absence of other operators frustrated the MGC commissioners, who felt that the discussion could have been more productive with broader participation from the state’s licensed sportsbooks. The MGC has not yet indicated whether more informal discussions on the topic will be conducted.

Comparisons with Other States

While Massachusetts debates tax increases, New Jersey and Illinois are also considering similar measures. Illinois Gov. J.B. Pritzker has expressed a desire to raise the sports betting tax rate in Illinois from 15% to 35%, which could generate an additional $200 million in annual revenue. New Jersey is also looking at a bill that would increase tax rates. Sen. John F. McKeon has introduced Senate No. 3064, which aims to elevate the state’s sports betting tax to 30%.

In Massachusetts, the conversation continues as lawmakers, operators, and regulators navigate the complexities of balancing revenue needs with a fair regulatory environment.

Source:

“Massachusetts Senate dismisses Massachusetts tax hike”, sbcamericas.com, May 23, 2024.