In early 2021, Virginia is set to become a part of the growing consortium of states offering online sports betting.
In comparison to other states with legal sports betting, how does the state fare as it prepares to launch its own sports betting industry?
Virginia sports betting launch and basics
To begin with, let’s provide you with essential information about sports betting in Virginia:
- Sports betting was made legal by the state in the spring of 2020 through the passing of a law.
- As of now, it seems highly probable that the launch will take place in early 2021.
- In the state, sports gambling is regulated by the state lottery.
- Up to 12 sports betting apps may receive authorization in the state, with a mix of future physical casinos and online-only operations operating them.
- The gross revenue is subject to a state tax rate of 15%.
Other states with sports betting
Virginia is not the sole state embracing sports betting. Since the federal ban was lifted in 2018, a frenzy has ensued among states to legalize sports gambling.
The following states (and jurisdictions) have implemented online sports betting at a statewide level:
- Colorado
- Illinois*
- Indiana
- Iowa*
- Michigan**
- New Hampshire
- New Jersey
- Nevada*
- Oregon
- Pennsylvania
- Rhode Island
- Tennessee
- Washington DC
- West Virginia
- Virginia**
*Registration in person is mandatory **Awaiting launch
States that exclusively allow betting at physical sportsbooks and designated locations.
- Arkansas
- Delaware
- Mississippi
- Montana*
- New Mexico
- New York
* Online betting is accessible on-site.
How big will the Virginia sports betting market get?
Once it reaches maturity, Virginia’s sports betting industry should be strong and thriving.
Trying to predict the predominant state of the Virginia industry is merely a speculative approximation. Every market within the United States, including Nevada, cannot be considered entirely “developed,” as it continues to expand through online betting and maintains the necessity for in-person registrations.
By the fifth year of its launch, PlayVirginia projects that the annual amount wagered in Virginia could reach $7 billion or more, potentially generating $400 million in gross gaming revenue for operators.
The industry should not be significantly impacted as the state is bordered by two neighboring states, Tennessee and West Virginia, where online betting is already legalized.
The presence of Gambet, a sports betting app in Washington DC, may have some effect on Virginia as well. In the absence of a legal option in DC, Virginia would have exclusive access to that market, except for offshore sportsbooks. However, the initial performance of the monopoly sports betting operation in DC has been unsatisfactory, potentially dampening its impact on the betting industry in Virginia.
Maryland’s legalization of sports betting could potentially draw market share away from Virginia, but the latter state is not currently prepared to legalize sports betting in the near future.
How many Virginia sportsbooks will there be vs. other states?
The maximum number of online sportsbooks allowed in Virginia is 12, and it is mandated by law that there will be a minimum of four sportsbook apps accessible throughout the entire state. However, the final count of sportsbooks will be determined by the number of casinos that receive approval through the fall referendum.
Additionally, there is a possibility of the establishment of five Virginia casinos, all of which appear to be progressing towards construction in the near future. It is worth noting that each of these casinos will have the option to include online sportsbooks.
Additional options for physical sportsbooks could include:
- If the Washington Football Team decides to relocate to Virginia,
- There is the possibility of having sportsbooks at NASCAR tracks located in Richmond and Martinsville. To delve deeper into the topic, let’s explore the potential for betting on NASCAR races at Martinsville and Richmond tracks.
Overall, this implies that Virginians will have numerous betting choices available to them.
Will bettors have it good with legal Virginia sportsbooks?
While gambling in Virginia offers a similar experience to many other states, the lack of a fully open market prevents it from achieving the same level of robust competition found in some states.
Advantages of Virginia sportsbooks
- There will be several options available to you when it comes to sportsbooks. In certain states, however, a single sportsbook app may have a monopoly.
- Virginia offers lower taxes and fees compared to numerous states, enabling sportsbooks to allocate more funds towards enhancing their product and marketing efforts. This investment will ultimately result in an improved user experience.
- Signing up for apps will be accessible across the entire state, eliminating the need for in-person registration in certain states like Iowa and Nevada. While some states have implemented temporary or permanent requirements for in-person registration, such as visiting a casino, this could significantly hinder the registration process for many individuals.
Disadvantages of Virginia sportsbooks
- The consumer will not benefit from a fully open and competitive market due to the limited number of licenses available in the industry. This situation is less than desirable. In comparison to Virginia, states like New Jersey, Colorado, and Tennessee currently have or will have a greater number of online sportsbooks.
- There will be limitations on the betting options available for college sports enthusiasts. Betting on Virginia college teams and in-game wagers will not be allowed. While some other states also have similar restrictions, this is not a common practice. Additionally, illegal offshore sportsbooks operating in Virginia will continue to accept such bets.
- The responsibility lies with the lottery, and although this approach hasn’t proven successful in other states, it is slightly different here since the lottery serves as a regulator rather than an operator. However, lotteries are not typically well-suited for overseeing the sports betting industry due to their differing areas of expertise.
Virginia sports betting tax and fees vs. other states
Among the states that have legalized sports betting, Virginia’s fees and taxes for sports betting operators are on the higher end, although still considered reasonable.
The 15% tax rate on gross sports betting revenue in Virginia, along with the $250,000 initial licensing fee for three years, are reasonable and should not impede sportsbooks interested in operating in the state. As mentioned earlier, these measures are expected to contribute positively to the growth of the Virginia sports betting industry.
The following figures represent the online sports betting revenue and licensing fees for states across the country.
| State | Tax rate (on gross gaming revenue) | Initial licensing fee |
|---|---|---|
| Virginia | 15% | $250,000 |
| Colorado | 10% | $135,000 |
| Illinois | 15-17% | $10 million; 3 online online-only licenses $20 million |
| Indiana | 9.5% | $100,000 |
| Iowa | 6.75% | $45,000 |
| Michigan | 8.4%-9.65% | $150,000 |
| New Hampshire | NA, revenue share | NA, competitively bid |
| New Jersey | 13% | $100,000 |
| Nevada | 6.75% | $500 |
| Oregon | NA, state-run monopoly/revenue share | NA, state-run monopoly |
| Pennsylvania | 36% | $10 million |
| Rhode Island | NA, state-run monopoly/revenue share | NA, state-run monopoly |
| Tennessee | 10% | $750,000 |
| Washington DC | NA, state-run monopoly/revenue share | NA, state-run monopoly |
| West Virginia | 10% | $100,000 |