GAMING AMERICA | FREE BETS
IS ‘FREE PLAY’ FREE OF RISK? James Lewis and Kristine Marsilio, Associates specializing in gaming law at Duane Morris LLP, consider reducing and eliminating promotional play to increase tax revenues.
As the US sports betting market develops, states are actively considering methods to increase potential tax revenue from legalized wagering on games. One method includes restricting operators from deducting promotional play from their gross gaming revenues (GGR) – an incentive also known as either 'free play' or 'free bets,' which sports betting operators use to expand their 44 | GAMINGAMERICA
user base. While such deductions can leave hundreds of millions of dollars on the table, states should consider whether targeting that revenue will produce the desired effect, before they rush to curtail or eliminate an incentive that attracts new consumers to an industry with relatively low profit margins. Since 2018, sports betting has expanded rapidly. As of February 2023, sports betting
is live or regulated in 36 states, plus the District of Columbia. It is anticipated that an additional four to six states will enact legislation to authorize sports betting before the end of 2023. Longer term, legal sports betting is estimated to spread to 42-46 states before 2025. The proliferation is driven, in part, by both consumer demand and an interest across American statehouses in new