Virginia Sports Betting Bill Drafted: Oxford Study Projects $380 Million In Net Revenue

DOVER, DE – JUNE 5: Bettors place wagers at Dover Downs Casino on June 5, 2018 in Dover, Delaware. Delaware is the first state to launch legal sports betting since the Supreme Court decision. (Photo by Mark Makela/Getty Images)Getty

Last week Virginia became the latest state to initiate a move into the regulated sports betting markets when Delegate Mark Sickles pre-filed House Bill 1638. This bill would see sports betting fall under the oversight of the state lottery, and despite having no casinos or racetracks operating within Virginia, legislators feel that this move would create more jobs while relieving the state’s reliance on federal spending by diversifying the economy.

Joining a long list of states looking to tap into this taxable resource, the Virginia bill offers a slight twist to proposals popping up elsewhere in the country in that it looks to offer no in-person wagering options.

House Bill 1638 identifies a sports betting platform as “a website, app, or other platforms accessible via the Internet or mobile, wireless, or similar communications technology that sports bettors use to place sports bets.”

Other details of the bill propose that all collegiate and professional sporting events involving Virginia teams be excluded as wagering options. It also prevents any “competitor, coach, trainer, employee, or owner of a team in a professional sports event or any referee for a professional sports event” from making a sports bet.

A limit of five sports betting licenses would be issued for three year periods with an initial cost of $250,000 each and a $200,000 renewal fee. A revenue tax of 15% would be imposed, with 2.5% going directly to the state lottery in form of an “administration fee”. For comparison, Rhode Island recently entered the sports betting market with a 51% net revenue tax, the highest in the United States.

HB 1683 suggest that 95% of the income would back research projects at state universities by means of the “Major Research Project Sub-Fund”, which comes as little surprise as Sickles serves as a representative on the Virginia Appropriations Subcommittee on Higher Education.

Early projections based on a study performed by Oxford Economics hint to a $5.2 billion betting handle with $380 million in net revenue annually, meaning that the 15% tax would generate close to $60 million each year before the state lottery receives their 2.5%.

The state lottery further benefits from this partnership as the push for a web-based wagering system would also open up opportunities to take lottery ticket sales online, leading to an increase in sales.

The bill makes no mention of royalty fees to be paid by either the state or lottery to sports leagues, but it does delegate a small percentage to help problem gamblers.

While the Sickles proposal is the only one officially on the table, another Virginian Democrat, Sen. Chap Petersen, has openly spoken about his desire to propose similar legislation but with a different plan as to how the taxed revenue is distributed.

In what he has named the “Virginia Sports Gaming Tuition Reduction Act”, Petersen aims to aid state community colleges rather than the universities mentioned in HB 1683.

Petersen is also requesting that sports betting to not be limited to online platforms.

In a recent interview with the Virginia Mercury, Peterson stated: “I’m not interested in people sitting in their parents’ basement with their pajamas on betting on a ‘Monday Night Football’ game, I want this to be part of a social entertainment package where people get out and spend money.”

With neighbouring West Virginia already a player in the regulated betting market, and with Kentucky, Maryland, North Carolina, Tennessee and Washington D.C. all discussing paths to legislation, the mid-Atlantic could soon become the sports betting hotbed of the United States.

Virginia’s opening legislative session is set to take place on January 9th, 2019, where the bill will be sent to a committee for debate. In 2018, West Virginia managed to pass a law and set regulations in just under half-a-year. We will soon find out just how eager state legislators are to jump into this booming marketplace.

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