BetMGM Sportsbook announced last week that its online sportsbooks would stop offering new player bonuses in Pennsylvania and New York.
In Pennsylvania, players may still receive a first deposit bonus at the related online casino and poker sites. BetMGM has these products in the state. In New York, there is no alternative, as only online sports betting is legal. The state has not approved online poker or casino games.
The new policy only applies to New York and Pennsylvania online sportsbooks. All other states where these companies operate still have a sportsbook bonus for new players, which is typically a loss rebate returned as a free bet.
Why did BetMGM stop offering sportsbook bonuses to Pennsylvania and New Jersey players?
Pennsylvania and New York have one thing in common that other states do not have. That is an exceptionally high tax on sportsbook revenues. While that is great for the government and those that receive services from it, that is a problem for sportsbook operators.
In Pennsylvania, a mobile sportsbook operator pays the state a tax of 36% of revenues. This is based on the sportsbook’s win, not the amount wagered, known as handle. Promotions may be deducted. However, the rate is still a burden. It is more than double the tax rate of most other states.
It is much worse in New York. The tax rate on mobile and online sportsbooks is 51%. As if that is not bad enough, promotions are not deductible from the tax.
The federal government also gets a cut of the new legal sportsbook industry. The handle is taxed at a rate of 0.25%. This is paid, regardless of whether the bet wins or loses. These taxes are difficult for operators to overcome, which is why the Pennsylvania and New York sports betting markets are not as profitable per player as other states with lower rates.
What a promotional deduction does
When an online sportsbook offers a player a bonus or free bet, that comes directly out of its revenues. In many states, this may be deducted against taxes paid. For example, if an online sportsbook gave a Pennsylvania player a $1,000 bonus, the company can deduct $360 of it against its state gaming taxes.
Considering the advantage a player receives from these types of bonuses, it helps to have a way to offset it. However, this is equal to the tax on a player depositing $1,000 and losing it. That is a wash.
If this player receives a $1,000 bonus and wins $500 of it, the site is out the $500, but can deduct $360 for a $140 net loss.
In New York, the state does not permit promotional deductions. If an online sportsbook gives a player a $1,000 bonus, there is no way to offset that against gaming revenues. If the player withdraws the winnings after meeting the terms and conditions, that is a total loss for the sportsbook.
Allowing deductions for promotions is standard in the gaming industry. When a live casino gives a player free play, that is typically deducted from the gross gaming revenues. Not permitting this type of deduction makes it unprofitable to offer perks to players.
Players in these states can still get BetMGM sportsbook bonuses
Sports bettors in Pennsylvania and New York can still receive the BetMGM sports bonuses. It takes traveling to a different state.
Bettors in these states can drive to New Jersey or West Virginia to get the free play bonuses. After claiming the bonus, the player can open a Pennsylvania account at these sites. Note that if you lose your first bet, you will need to return to the other state to make the free bet before it expires.
Another idea is to claim the online poker or online casino bonus instead. These are available in Pennsylvania, but not New York. Players can only receive one bonus under a brand, and the poker and casino bonuses are advantage plays. If you play online poker, that is probably the better offer at BetMGM. BetMGM offers a great online casino bonuses that return over 100% at certain games. This way you can start with a bankroll boost without needing to drive to another state.