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Virginia bill introduced capping tax deductions for bonuses


A bill has been introduced in the Virginia Senate limiting tax deductions for bonuses and promotions.  

Senate Bill 1142 – introduced by Democratic state senator Jeremy McPike – would amend the existing code of Virginia definition of adjusted gross revenue. Under current law, “adjusted gross revenue” means gross revenue minus four specified deductions.

The proposed amendment would change the first deduction which allows for allows for operators to deduct all bonuses and promotions from gross revenue. It would seek to impose a cap on the amount that can be claimed beginning at 2.5% of the total wagered by the player in 2023/4, lowering to 1.75% by 2026.

This would have the effect of potentially raising the tax burden on sports betting operators in Virginia, since it is adjusted gross revenue, not gross revenue which is subject to the state’s 15% gaming tax.

The bill has been assigned to the Committee on Finance and Appropriations.

State gaming market

In April 2020, Virginia legalised sports betting after the then-governor Ralph Northam signed House Bill 896 into the law. Following the launch of the regulated market in January 2021, Virginia has grown to be a significant sports betting market.

In November 2022, consumers in Virginia wagered 518.8m (£431.5m/€488.9m) on sports, leaving an adjusted gross revenue of $52.8m.

Divided government

Following the results of the 2022 US Midterm elections, the Virginia government is divided between the Democratic and Republican parties. The governor’s mansion is occupied by a Republican – Glenn Youngkin – as is the state house.

Meanwhile the senate, the chamber the bill’s sponsor McPike resides, is a Democrat. Therefore, whether the bill will succeed or fail depends on the extent of bipartisan cooperation that can be achieved.