Tax Reforms Spark a Shift in VIP Rewards for Sports Betting
As summer unfolds, the landscape for sports betting across the United States is being reshaped by significant tax reforms at both the state and federal levels.
The first signs of this upheaval cropped up around Memorial Day, when Illinois implemented a pioneering tax on sports wagering. This was soon followed by an amendment in President Donald Trump’s "One Big Beautiful Bill," which restricts the write-offs available for gamblers on their annual tax returns.
For bettors in Illinois, these tax modifications result in a potential reduction in earnings. Some sportsbooks have already signaled that they will pass the financial burden onto their customers. Adding to their challenges, traditional sportsbooks now face competition from prediction markets that operate with fewer tax liabilities.
These developments raise critical questions about the future of VIP programs at sportsbooks. Across the Atlantic, the UK has seen its VIP incentives curtailed due to strict regulatory measures aimed at mitigating gambling addiction. Consequently, executives in the U.S. may find their agendas busier as they strategize to retain high-rolling customers.
The Impact of High Rollers
Although VIP bettors represent a small fraction of any sportsbook’s clientele, their wagers account for a significant portion of total handle. Recently, Fanatics, for instance, captured a noteworthy 23.5% market share in New Jersey, outperforming competitors like DraftKings. This success can often be traced back to a handful of exceptionally high-stakes players, with reports indicating that one individual was responsible for a striking majority of the revenue losses.
VIP programs typically offer a suite of perks, including enhanced betting opportunities and exclusive promotions. However, sportsbooks now find themselves in a competitive bind, as prediction markets can provide more attractive odds without the same tax implications.
Exploring New Incentives
The debate over how to attract and retain VIP players heated up during a recent meeting of the National Council of Legislators from Gaming States. Industry expert Chad Beynon suggested that U.S. operators might need to rethink their incentive structures, drawing inspiration from the lavish perks offered in Las Vegas, such as private events and celebrity meet-and-greets.
In conversations with a leading sportsbook, Beynon noted that personalized experiences, such as dining with NBA players, have been put on the table as a way to entice high rollers.
Concerns Over UK Regulations
As U.S. lawmakers evaluate the implications of VIP programs, they’re closely watching developments in the UK, where new regulations have drastically reduced the number of VIP participants—by as much as 90%—in an effort to protect at-risk gamblers. These regulations mandate careful scrutiny of customers’ financial sources, ensuring that only those who can afford to gamble are categorized as VIPs.
Meanwhile, legislation has been proposed in the U.S. that may impose similar restrictions on VIP bettors. Recent updates about the SAFE Bet Act indicate a potential framework for federal regulations governing sports wagering.
Financial Implications for Bettors
With the new tax rules introduced under the "One Big Beautiful Bill," gamblers can now only deduct 90% of their annual losses, a reduction from the previous allowance of 100%. This alteration has drawn criticism from figures within the gambling community, including professional poker players who argue that such policies could stifle both casual and professional betting activities.
In an effort to combat this and restore the full deduction, Representative Dina Titus of Nevada has introduced the Fair Bet Act, which has garnered bipartisan support and aims to provide much-needed relief for bettors.
Looking Ahead
As debates continue, there’s a strong possibility that we will see a wave of innovation in how sportsbooks engage their high-value customers. The changing regulatory backdrop, combined with competitive pressures from prediction markets, could lead to a reinvention of VIP experiences that keeps high rollers coming back—despite the new taxes that may initially deter them.
In a rapidly evolving market, the stakes are higher than ever for both bettors and operators, setting the stage for a transformative summer in the sports betting industry.