Since its launch in 2021, online sports betting in Virginia has flourished. With over a dozen active platforms, the market for online betting is thriving.
In terms of the retail sector, Virginia has made significant advancements in recent times. The authorization for five physical casinos has been granted. While one has experienced consistent delays, progress is being made on four others. Among them, Caesars Danville is expected to be the next casino in Virginia to commence operations.
As the Virginia casino industry continues to prosper, a vital inquiry lingers: Is the legalization of online casinos in Virginia on the horizon?
It’s incredibly difficult to predict the legislative outcome of any state’s online casino efforts. In the US, we have witnessed the passage of underwhelming bills and the failure of player-friendly legislation in committee. Therefore, it’s a major uncertainty.
Determining whether online casinos will be legalized in Virginia is still an unsolvable puzzle. Nevertheless, by examining the progress made up to this point, we can attempt to make an informed prediction.
Virginia’s online casino story so far
If you inquire about online casinos to Virginia legislators, you might be met with silence as they have remained largely silent on the matter. The state’s current gambling platforms require significant attention and management. In April, casino revenue surpassed $35 million, while March witnessed sportsbooks accepting wagers of over $500 million.
Furthermore, there are still unresolved issues within the system. Rivers Portsmouth, one of the previously mentioned newly established casinos, incurred a penalty of $275,000 for breaching regulations. Although the casino has made efforts to address these problems, the fine serves as a symbol of an industry that is still striving to find stability.
To put it simply, the online casino gambling book of Virginia is still in its early stages and doesn’t have a prologue yet.
What would it take for VA to legalize online casinos?
To begin the process, state legislators will undertake the task of formulating a bill aimed at legalizing online casinos. However, the bill will have to undergo several stages of approvals before ultimately reaching the desk of Gov. Glenn Youngkin. It is important to note that this is a highly condensed summary, as the journey of an online casino bill typically spans several months or even years before it reaches Youngkin’s desk.
Despite signing a bill endorsing new problem gambling treatment initiatives, it remains uncertain whether Youngkin would advocate for online casinos. Given his focus on the well-being of Virginia’s youth, it is possible that online casinos are not currently a priority for him.
Alternatively, the implementation of a stringent regulatory framework to safeguard gamblers could serve as a compelling justification for the legalization of online casinos. By providing the means to ensure player protection, online casino platforms have the potential to offer significantly enhanced safety measures.
Another crucial aspect to consider is the presence of established sports betting operators in Virginia. With a pool of existing operators like DraftKings, BetMGM, Caesars, FanDuel, BetRivers, and others, the state has a ready roster of potential online casino launchers, given they obtain the necessary licenses.
Pressure from the neighbors?
The surrounding region has proven to be a significant motivating factor for Virginia to make advancements in online casinos. In 2020, West Virginia introduced online casinos, which served as a catalyst for Virginia. Additionally, nearby states like New Jersey and Pennsylvania have already established thriving online casino markets, generating substantial revenue for their residents. Michigan recently joined the online casino industry in 2021 after legalizing it in the state.
The presence of a solitary legal online casino near Virginia’s borders may potentially influence the state’s decision to legalize such gambling. While neighboring states’ influence alone is not typically the sole reason for a new market to legalize, it certainly has its advantages. For instance, Ohio legalized sports betting after witnessing neighboring states like Indiana, Michigan, Pennsylvania, and West Virginia doing so. Similarly, Illinois followed the examples set by Iowa and Indiana.
Is it possible for online casinos to experience a similar domino effect? While it hasn’t happened yet, there is potential, particularly due to the advantages of entering the industry later.
Could the copycat approach work?
There are benefits to being tardy to the party. Specifically, one can gain insights from the accomplishments and errors of established markets. Virginia could initiate its endeavors by utilizing another state’s framework, and subsequently modify the rules and regulations to align more effectively with the commonwealth.
As an illustration, the following outline presents the fees and tax rates applicable to online casino operators in the four legally authorized states:
- In West Virginia, businesses are required to pay a license fee of $250,000, along with a five-year renewal fee of $100,000. Additionally, there is a tax of 15% imposed on the gross revenue.
- In Pennsylvania, the license fee for various types of games ranges from $4 million to $10 million. The license needs to be renewed every five years at a cost of $250,000. The tax rates differ based on the game being played. Peer-to-peer games like poker have a 14% tax rate, table games have a 16% tax rate, slots have a 54% tax rate, and sports betting has a 36% tax rate.
- In New Jersey, there is an application fee of $100,000, which can be credited towards a $400,000 license fee if the application is approved. The license requires an annual renewal fee of $250,000. Additionally, there is a 15% tax on gross gaming revenue along with a 5% investment alternative tax.
- Michigan requires a $50,000 application fee and an initial license fee of $100,000. Additionally, there is a five-year renewal fee of $50,000. The state imposes a graduated tax system based on adjusted gross receipts, with rates as follows: <br>- Less than $4 million: 20%<br>- $8-10 million: 22%<br>- $10-12 million: 24%<br>- $12 million or higher: 28%
With a population of 8.6 million, Virginia is the state closest in size to New Jersey, which has a population of 9.3 million. Considering this similarity, New Jersey could potentially serve as an exemplary model for the commonwealth.
The structure of online casino operations can differ significantly across different markets, even with only four states currently offering such services. Virginia can gain valuable insights from its neighboring competitive markets, which can serve as examples or starting points for the state’s own gambling regulations. Since the US permits state-level gambling regulation, Virginia has the flexibility to either adopt existing structures or develop its own from scratch.
From spark to flame?
Virginia becoming the next state to legalize online casinos would make it the southernmost state to do so, potentially initiating a chain reaction that could lead to more legislation on the east coast. As online gambling continues to expand beyond sports betting, which currently dominates the gambling industry in terms of growth, Virginia’s decision could serve as a catalyst for other states to follow suit.
Naturally, this is speculative. However, historical evidence has indicated that markets tend to emulate the behavior of others, metaphorically referred to as “keeping up with the Joneses.”
We will provide you with regular updates on all progress regarding Virginia’s potential status as the first in a new wave of online casino states.
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