People considering this strategy should be aware that the sports-betting companies have lobbied many state legislatures to make these promotional “risk-free first bets” deductible from the companies’ tax bills.
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 would mean that following the steps outlined here would reduce the tax revenue that Massachusetts has available to pay for public programs like education and public safety (or return directly to taxpayers, as it did with surplus revenue last year).
As recently reported in The Boston Globe:
The New York Times recently revealed that numerous states that have recently legalized betting have allowed apps to deduct the money they dole out in promotions from their taxable revenues. The question remains unsettled here in the Commonwealth. At the most recent meeting of the Massachusetts Gaming Commission, commissioners decided that they had the authority to decide whether promos would be deductible (by a 3-to-2 margin) but tabled the question until a future meeting.
If they ultimately do decide in the apps’ favor, we’ll all be paying for my bonus bets.
I think reasonable people could differ on whether it’s morally permissible to take a favorable promotional deal from companies in an unusually harmful industry, especially if the deal has a side effect of reducing public resources. I’m not personally comfortable taking such a deal, and I’d encourage others to allow some time for reflection before doing so.
Thanks for this addition. I think I agree about the likely net effects on the companies’ profits and tax bills, and I mostly mean to be highlighting that some (uncertain) fraction of the money people gain by following this approach would counterfactually have ended up in the hands of the state government, not the sports-betting companies.
That consideration makes the strategy less attractive than it would be if the money came entirely from the companies,[1] and it might be enough to make the proposed strategy net-harmful by some people’s lights, especially if they are less than certain that:
They will stop betting as soon as they exhaust their “free” bets.
They won’t inadvertently promote sports betting to others who might be harmed by exposure to the industry.
They will donate almost all of the proceeds to charitable causes that are more beneficial than marginal public spending.
I think it’s reasonable for people to worry that one or more of these conditions won’t hold in practice.
This point doesn’t hold if you think marginal public spending is worse than marginal corporate profits for sports-betting companies, but my guess is that relatively few people hold that view.