A study commissioned earlier this year that provides an overview of several gambling expansions under consideration in Virginia was recently submitted to the Joint Legislative Audit and Review Commission.
The study was carried out by The Innovation Group and Regulatory Management Counselors and looked at several scenarios should Virginia choose to authorize some or all the gambling expansions it preauthorized earlier this year.
What Is Virginia Considering Legalizing?
Virginia is one of a shrinking number of gambling holdouts, but it could soon find itself in the gaming state column.
SB 1126, approved in March, was an interesting bill that provided a glimmer of hope that gaming could become a reality in the Commonwealth. Not only would the bill bring about long-sought-after casinos, but it also contained provisions that could lead to sports betting and online casinos.
But that’s not the interesting part of the bill. The interesting part is SB 1126 only goes into effect if the legislature reauthorizes it in 2020.
That provision puts the measure on tenuous ground, with plenty of people chalking it up to Virginia being Virginia, and the effort not being a serious one.
That said, with sports betting (and other gaming expansions) sweeping the nation, and the positive study submitted to the legislature, Virginia is in play. Even if the ultimate vehicle isn’t SB 1126, there seems to be a growing appetite for gaming in the state.
Study Paints Sports Betting and Casinos in a Positive Light
According to the study, the Virginia sports betting market is estimated at $462 million annually. With a modest tax rate of 12%, the state would see about $55 million flow into its coffers each year from sports betting.
The study estimates a land-based casino industry like the one proposed in the legislation would generate nearly $1 billion by 2025 and net the state $262 million annually.
Of note, the study estimates mobile sports betting at nearly $400 million annually. That provides the legislature an opportunity to legalize sports betting and forego legalizing casinos (often a more contentious issue) by following in the footsteps of Tennessee and authorizing mobile sports betting without tying it to land-based casinos.
Richmond, We Have a Problem
As pleasantly as the report portrayed the sports betting opportunity, one element of the study will be a bit of a headscratcher for industry insiders.
According to the Virginia study, mobile sports betting is estimated to generate $400 million annually, and online casino games estimated to generate $311 million annually.
That doesn’t line up with the breakdowns we see in other markets.
In virtually every market where sports betting and online casino games coexist, it’s online casino that generates the most revenue.
Estimates from Europe indicate sports betting accounts for 42% of all online gambling revenue, while online casino accounts for 47% of total online gambling revenue. Poker and games like bingo make up the remainder.
Yet somehow the study handed into the Virginia legislature came to a different conclusion. When it comes to Virginia, the study says that if both were legal, sports betting would account for 56% of potential online revenue.
That just doesn’t lineup with any historical evidence.