Free-play; Gaming Tax; Gaming Regulation; Casino Management; Slot Revenue


Advertising and Promotion Management | Business | Business Administration, Management, and Operations | Business Intelligence | Gaming and Casino Operations Management | Gaming Law | Hospitality Administration and Management | Social and Behavioral Sciences

Document Type

Original Research Article


Free-play is the primary play incentive for slot players in many jurisdictions, with some campaigns eclipsing $50 million in annual redemptions. The efficacy of these incentives remains questionable at best, creating some contentious tax policy issues. Operators want to deduct the face value of these offers from taxable gaming win, based in part on the assumption that they expand the tax base; however, many regulators and taxing authorities question this claim. Any failure to fully recover redeemed free-play creates a deduction that is partially funded by tax payers. Arguments on both sides of this complex tax policy issue are thoroughly covered. An extensive review of academic research suggests that most campaigns are not fully recovering redeemed free-play credits. Recommendations include the use of extant time series models to measure returns on free-play campaigns. These models will help operators improve returns and address regulator concerns regarding unwarranted tax deductions. The wide range of different tax treatments across jurisdictions suggests regulatory uncertainty and a need for policy guidance. The data-driven policy reform advanced herein offers an equitable win-win scenario. Anything short of this is likely to fuel continued speculation by both sides, further straining the relationship between regulators and operators.

Funding Sources

The Caesars Foundation funded this research. In no way did this foundation influence the direction or outcomes associated with this study.

Competing Interests