Deductions for Net Sports Betting Proceeds

As approved by voters in 2019, a tax of 10% is imposed on net sports betting proceeds. Under current law, for the purpose of calculating its net sports betting proceeds, a sports betting operator or internet sports betting operator is allowed to deduct all payments to players, all federal excise taxes paid, and a certain percentage of free bets placed by players as follows:

• Between July 1, 2025, and June 30, 2026, no more than 2% of total free bets placed each month; and
• On and after July 1, 2026, no more than 1.75% of total free bets placed each month.

The bill alters the current percentage of free bets allowed to be deducted as follows:

• Between July 1, 2025, and December 31, 2025, no more than 2% of total free bets placed each month; and
• Between January 1, 2026, and June 30, 2026, no more than 1% of total free bets placed each month.

Beginning on September 1, 2025, July 1, 2026, the bill removes the deduction for all free bets placed. For the 2025-2026 state fiscal year, $17,135 is appropriated from the sports betting fund to the department of revenue for personal services and tax administration IT system support.

(Note: Italicized words indicate new material added to the original summary; dashes through words indicate deletions from the original summary.)

(Note: This summary applies to the reengrossed version of this bill as introduced in the second house.)