The tax treatment of these promotions in Massachusetts seems to be unsettled; however, companies may end up being able to deduct promotional bets from their taxable income, as they can in other states.
That seems like the straightforwardly correct way for things to work. Offering these promos is an expense for the company, reducing profits, just like if they had spent the money on advertising. Since corporate taxes are levied on profits, anything that reduces your profits should reduce your taxes.
Of course, if the promotion is effective, it will overall increase their revenue and profits—and hence the taxes paid—again just like an advertising campaign.
The same argument could be applied to any discount that any firm offers—should people feel guilty for buying clothes on clearance sale, or accepting a free sample at the supermarket, as this also reduces profits and hence taxes? I don’t think people should feel guilty about ’it is possible that this activity might be taxed in a manner consistent with other activities.
Most people aren’t buying clothes on clearance or accepting free samples at the supermarket with a primary goal of maximizing altruistic impact; if they were, I think it would be reasonable for them to account for the tax-revenue consequences in their decision. (I do think it’s permissible to accept those kinds of promotions in everyday life, but I think that’s separate from how we should account for their impact.)
That seems like the straightforwardly correct way for things to work. Offering these promos is an expense for the company, reducing profits, just like if they had spent the money on advertising. Since corporate taxes are levied on profits, anything that reduces your profits should reduce your taxes.
Of course, if the promotion is effective, it will overall increase their revenue and profits—and hence the taxes paid—again just like an advertising campaign.
The same argument could be applied to any discount that any firm offers—should people feel guilty for buying clothes on clearance sale, or accepting a free sample at the supermarket, as this also reduces profits and hence taxes? I don’t think people should feel guilty about ’it is possible that this activity might be taxed in a manner consistent with other activities.
I think there are two differences that might matter to some people, but I don’t mean to claim that they will or should be decisive for everyone:
The relevant marginal tax rates for sports-betting companies are much higher than for companies selling consumer goods like clothes and food; in Massachusetts, I think the relevant tax rate is 20% for app-based sports betting.
Most people aren’t buying clothes on clearance or accepting free samples at the supermarket with a primary goal of maximizing altruistic impact; if they were, I think it would be reasonable for them to account for the tax-revenue consequences in their decision. (I do think it’s permissible to accept those kinds of promotions in everyday life, but I think that’s separate from how we should account for their impact.)