Last week, lawmakers introduced two legislative measures that could potentially modify regulations in the Virginia sports betting market. One of these measures specifically focuses on the prohibition of in-state college betting. These proposed changes may result in a boost of revenue for the state of Virginia.
Currently, it is not allowed for gamblers to place bets on the University of Virginia, Virginia Tech, and other educational institutions situated in Virginia. Furthermore, operators are not obligated to disclose the income generated from promotional bonuses provided to their customers.
If the proposals are approved, both of those rules might undergo alterations.
In-state betting ban hurts bettors and sportsbooks
HB 1127 was introduced by Del. Schuyler T. VanValkenburg, a Democrat from Virginia’s 72nd District in the House of Delegates, on Wednesday. This bill aims to permit sportsbooks to take wagers on college sporting events held by Virginia universities.
Virginia is home to 14 NCAA Division I college athletic programs, with dedicated and passionate fanbases supporting teams like the Virginia Cavaliers, Virginia Tech Hokies, and Liberty Flames.
The inclusion of Virginia colleges as eligible teams for betting could attract a wave of new casual bettors eager to wager on their beloved college teams. This surge in participation has the potential to significantly boost gaming and tax revenue due to the influx of capital.
VanValkenberg’s proposal would only allow betting on the result of the event, while proposition bets involving Virginia colleges would continue to be prohibited under the bill. These proposition bets, also known as “props,” are wagers that are not directly linked to the game’s outcome. For instance, betting on the total points or rebounds of a specific player are typical examples of prop bets.
Additionally, there exists a corresponding bill in the higher chamber. SB 576 has been forwarded to the Senate Committee on General Laws and Technology. However, HB 1127 has not yet been assigned to a committee by the House of Delegates.
Changing tax reporting requirements for operators
Del. Mark Sickles, a fellow Democrat, introduced a bill on Wednesday to amend Virginia’s sports betting regulations.
On the first day of the 2022 legislative session, HB 1103 was introduced by Sickles. This bill aims to mandate operators to include bonuses and promotion spending as taxable revenue. Furthermore, as per the bill’s summary, it would also prevent sportsbooks from offsetting losses when determining their tax liabilities.
After the initial year of wagering activity, (HB 1103) makes it illegal for sports betting operators to exclude bonuses and promotions from taxable revenue. Additionally, the bill removes the option for sports betting permit holders to carry over monthly losses when calculating taxable revenue.
The proposition presented by Sickles aims to maintain the existing tax rate of 15% on sports betting earnings. In the latest month of November, where sports betting data was available, the state generated an astounding $4.2 million in revenue from sports betting operators. This remarkable figure surpassed the previous record.
In November, the licensed sports betting apps in Virginia collectively received $402.6 million in total wagers. These apps reported an adjusted gross revenue (AGR) of $29.9 million, which represents the taxable amount. The adjusted gross revenue is calculated by subtracting the federal excise tax and promotional money from the gross gaming revenue.
If the changes in the tax structure are approved by the legislature, Virginia’s revenue is bound to increase. Nonetheless, it may have a negative impact on consumers as it could discourage sportsbooks from providing promotions such as free bets and deposit bonuses.
Virginia is currently one of the largest and most rapidly expanding markets nationwide. In the month of October, it achieved a remarkable feat by becoming the fastest state to surpass the $2 billion milestone in total sports betting handle. During this period, sportsbooks received an impressive $427.3 million in sports wagers.
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