Virginia Legislature Passes Bills Legalizing Sports Betting

Casinos and sports betting are a Gov. Ralph Northam signature away from becoming a reality after the Virginia Legislature passed two separate gambling bills, HB 896  and HB 4,  this weekend.

Things looked dicey when the House voted down the sports betting bill on Saturday. But an ad hoc committee meeting produced a compromise bill the legislature was able to pass during an extended session on Sunday.  

As noted above, the next stop is the Governor’s desk.

Gov. Northam can sign the bills into law, veto them, or amend them and return them to the General Assembly for a special session next month. Chatter suggests the Governor will likely sign the bills or, less likely, propose changes – what those changes might be is anyone’s guess.  

What Will Virginia Sports Betting Look Like?

Because sports betting was somewhat tethered to the casino bill, the specifics are a bit muddled.

Here’s what we know:

• The Lottery Board will regulate the Virginia sports betting industry.
• The deadline for regulations is September 15, 2020, and licenses must be issued within 60 days of that date.
• The Board can issue between four and 12 online sports betting licenses. The Board is tasked with determining the correct number of licenses to maximize state revenue. 
• Licensees are limited to a single skin (brand).
• If the Governor signs the casino bill, the casinos and professional sports franchises in the state will have preferential access to licenses. These “preferred” licenses are in addition to the 4-12 licenses the Lottery Board will hand out, and would come much further down the road considering how long it takes to build a casino, however, the casinos can offer mobile sports betting before they open.
• The casinos could also offer retail sports betting.
• The initial non-refundable application and licensing fee for a sports betting license is set at $250,000.  Once approved, licenses are valid for three years, with a renewal fee of $200,000.
• The sports betting tax rate is 15% on adjusted gross revenue. The bill allows operators to deduct promotional play as well as the federal excise tax from AGR.
• Betting on Virginia college and university games is prohibited.
• Prop bets on all college athletics are prohibited.
• Mandates the use of official league data to settle in-play wagers (a trend that seems to be gaining momentum). The official data must be offered on “commercially reasonable terms,” which means that the data is available from more than one source.

What About Virginia Casinos?

The casino bill legalizes commercial casino gambling in five cities (pending a local referendum):

• Danville
• Bristol
• Richmond
• Portsmouth
• Norfolk

Interestingly, at least one, and possibly two of the proposed locations would be operated by the Pamunkey Tribe.

A statement by the Tribe reads:

“The Pamunkey Tribe is eager to move forward with its plans to build a world-class resort and casino in Norfolk and ready to respond to Richmond’s Request for Proposals to bring a casino to the River City. After centuries of disenfranchisement and social injustices, the Pamunkey Tribe is on the verge of ensuring the long-term success of the Tribe. Its plans to build two resorts with casinos will allow the Tribe to provide needed programs and services to its members. It will be a great partner for Norfolk and Richmond. The Tribe will keep profits in Virginia through reinvestment locally and will provide tremendous benefits to these regions of the Commonwealth for decades to come.”

Another known casino project is Hard Rock Bristol.

In a statement to News Channel 11 the ownership group said the following:

“We are pleased that the General Assembly passed HB 4 and SB 36 and are excited about the potential it will bring.  This legislation allows for major economic development projects in Bristol, Danville, Portsmouth, Richmond and Norfolk and will bring thousands of new jobs and millions in additional tax revenue to Virginia. We want to particularly thank Del. Terry Kilgore and Sen. Todd Pillion and the entire Southwest Virginia delegation for their relentless support and hard work, and Senator Louise Lucas for her vision and commitment to make this legislation a reality.

We look forward to the Governor acting on the legislation as it advances to him for consideration.  These projects will help five cities in desperate need of new tax revenue to fund education, public safety, and other critical local needs.  

We are excited about bringing our world-class entertainment brand to the people of Virginia.”

The casino licenses come at a steep cost.

The bill requires a minimum investment of $300 million at each casino property.

Initial licensing fees are set at $15 million for a term of ten years.

Casino gambling is taxed at the following rates:

• Tier 1: 18% on the first $200 million in annual gaming revenue
• Tier 2: 23% on revenue between $200 million and $400 million
• Tier 3: 30% on revenue above $400 million