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Going for the Grapes: What's the Difference between Turnover and GGR for Gambling Taxes?
In the dicey world of gambling, taxation approaches can make or break the game for operators. Two main methods stand out: taxing turnover and taxing Gross Gaming Revenue (GGR). Let's dive in and see what each tactic means for the dough.
Turnover Taxing:This nifty method involves slapping taxes on the total amount of bets placed by thrill-seekers – the turnover. It's a straightforward approach, but one that could weigh heavily on operators, considering they'll be taxed on the entire amount gambled, regardless of whether they rake in profits.
Take Tennessee, for instance, where a 1.85% tax on the handle is the law of the land[5].
GGR Taxing:On the flip side, GGR references the gap between the money wagered and the dough given back to players as winnings. It's a more favored approach because operators only pay taxes on their hard-earned profits, thus lightening the taxation burden.
Massachusetts, for example, whacks a 25% tax on GGR, ensuring operators only fork over taxes on their unbeatable earnings[4].
The taxing duel between India and Ukraine:India's gambling scene is a wild card at the federal level, mostly unregulated, but some states allow certain forms of gambling. The taxing policies differ by state, following either a turnover or GGR model depending on local regulations.
Ukraine is on a roll, recently legalizing sports betting, and might opt for a GGR model like other European countries that tend to tax net revenue, fostering growth and investment in the industry.
In a nutshell, turnover taxation is a real pain for operators since it includes every single bet, while GGR taxation is a far more appealing option because it only targets the net earnings, possibly creating a healthier industry ecosystem.
Sources:[4] Mass.gov, Department of Revenue, Regulation 830 CMR 64H.100: Wage Withholding and Employee’s Return of Income, 2020.[5] TN.gov, Tennessee Education Lottery, Education Lottery's Operations & Fiscal Management, 2020.
In the context of gambling taxes, a turnover tax targets the total amount of bets placed by gamblers, weighing heavily on operators as they're taxed on the entire amount gambled, whereas sports finance in Ukraine, following the legalization of sports betting, might adopt a GGR tax model like other European countries, which focuses on net earnings, creating a potentially healthier industry ecosystem.
