BRISTOL — Sports wagering, like casino gaming, took a large step toward legalization this week as legislation advanced through both chambers of the Virginia General Assembly.
While casino legislation has attracted much of the attention among an array of gaming bills, lawmakers also approved Senate Bill 384 and House Bill 896 to allow sports wagering with oversight by the Virginia Lottery Board. Each chamber will take up the other’s bills over the coming weeks.
A 2019 Joint Legislative Audit and Review Commission report estimates legalized sports wagering would generate between $22 million and $55 million per year in new gaming tax revenue for the state, based on a 12% tax rate.
That represents between 8% and 17% of total projected annual gaming tax revenues generated by a combination of five proposed Virginia casinos, online casino gaming and sports betting.
Dan Walsh, spokesman for iDEA Growth,a Washington, D.C.-based trade group representing the mobile gaming and entertainment industry, said those estimates are consistent with what other states are seeing.
“They [commission] were reasonable in their assumptions. They looked at New Jersey, which is a good state to look at in that it’s similar in size and income. It’s a mature market,” Walsh said Tuesday . “A lot of other states focus on their existing brick-and-mortar casinos, but Virginia doesn’t have any. It’s similar to Tennessee where it’s all mobile, as Tennessee doesn’t have brick-and-mortar casinos.”
In 2018, the U.S. Supreme Court ruled that the Professional and Amateur Sports Protection Act was unconstitutional. This removed the national prohibition on state-sponsored sports wagering and created a pathway for states to legalize sports-wagering operations, according to the report.
In the wake of that ruling, sports betting is operating in 13 states, with most at existing gaming facilities, according to the report. Five others, including Tennessee, plus the District of Columbia, have passed legislation allowing legalized sports wagering, but it isn’t yet implemented. Virginia is one of 25 states where lawmakers are considering sports wagering legislation, according to the iDEA Growth website.
Virginia bills would empower the Virginia Lottery Board to oversee sports gaming and establish stringent background checks on anyone involved.
The sports-gaming discussion has prompted entities like the National Football League and the Washington Redskins , Major League Baseball, the National Basketball Association and Professional Golfers Association Tour to send lobbyists to Richmond, according to the Virginia Public Access Project website.
“There are some differences between the bills. The House bill has a tax rate of 20%, while the Senate bill has a tax rate of 15%,” Walsh said. “The House bill would prohibit bets on Virginia college sports, but the Senate bill wouldn’t do that. The House would allow the lottery to issue anywhere from four to 12 licenses, while the Senate would allow between six and 10.”
Walsh called the 15% rate on the “high side” and called the 20% rate “high” compared to other states.
“Keep in mind you’re trying to compete with an illegal, offshore market that pays a [tax] rate of zero,” Walsh said. “People want to play in a legal market, they want to know they’re going to get paid if they win, and they want to know they’re not dealing with organized crime people. People enjoy sports betting, and lots of people do it in an underground market that would rather be doing it in a licensed market.”
Sports wagering revenue is taxed at varying rates across states, but tax rates tend to be lower than those levied on casino gaming revenue, according to the study.
“In general, taxes on sports wagering revenue range from 7% to 20%. Of the 13 states that currently offer sports wagering, only Pennsylvania, Rhode Island and Delaware have tax rates higher than 20%, according to the study.
“Industry stakeholders and experts expressed the opinion that a 10% to 15% tax rate would allow sports wagering operators to maintain a sufficient level of profitability,” the JLARC study said.
Walsh said iDEA Growth supports allowing betting on all college and pro sports rather than excluding teams from within Virginia, although some states have similar provisions.
Jim McGlothlin and Clyde Stacy, developers of the Hard Rock Bristol Resort and Casino proposed for the Bristol Mall, previously said they intend to offer sports gaming if casino gaming is approved.
Walsh said sports gaming can be a valuable amenity for traditional casinos beyond rows of slot machines and traditional table games.
“It’s fun to watch sporting events and sports bet, not just on the final outcome, but in-game bets are really popular. Sports betting can be important for a brick-and-mortar casino,” Walsh said.
Harrah’s Cherokee Casino in western North Carolina is opening an expanded sports gaming space.