Appropriations committee advances bill phasing out tax deduction for sports-betting promotional bets

The Senate Appropriations Committee on House Bill 13‑11 voted 5–2 to advance a measure that phases out the ability of sports-betting operators to deduct promotional or “free” bets from the voter-approved 10% tax on gross gaming revenue.

Sponsor Senator Roberts told the committee the underlying ballot measure in 2019 authorized a 10% tax and that existing statute allowed operators to exclude promotional bets from taxable revenue; the bill would phase out that exclusion so the promotional activity is taxed. Roberts said the change “is not a tax increase” because only voters can increase tax rates and that the measure would bring additional revenue—committee discussion and the fiscal note suggested an eventual increase to water-project funding of roughly $10 million to $11.5 million per year in the long run.

Committee members asked about prior agreements and implementation speed. Roberts said the house amendment phases out the exemption gradually: deductions would be cut to 50% by Jan. 1, 2026, and eliminated by June 30, 2026. Several senators said they wanted time to confirm prior agreements with the gaming industry; others noted they were supportive of directing more revenue to water projects. The transcript shows the bill passed committee 5–2 and will move forward for further consideration.

The transcript shows some senators expressed concern about the speed of the phase-out and potential backroom agreements; sponsors emphasized this change makes promotional activity subject to the tax voters approved and pledged not to pursue ballot measures to raise the tax rate for at least two years.