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A first-of-its-kind bill to legalize online gambling in Virginia has already been set aside for the 2025 calendar year, with lawmakers seeking additional time to evaluate its impact on the state. This comes barely days after the bill received its first committee assignment.
Senator Mamie Locke introduced Senate Bill 827 on the final day of 2024. The proposal would have granted the Virginia Lottery Board power to issue licenses to online gaming operators and oversee market regulation. It was set to be discussed by the Senate Subcommittee on Gaming earlier this week, but Senator Locke requested a delay, citing a need for more comprehensive research.
“This bill is designed to authorize reputable, regulated companies to offer internet gaming to Virginians within a safe and legal market,” Locke said. “However, after introducing this bill, we have decided that it requires further study on this issue.”
Under the proposed legislation, operators would need to pay a $1 million license application fee and a 15% tax on earnings. Notably, 97.5% of the revenue would go into the state’s General Fund, while the remaining 2.5% would support the Problem Gambling Treatment and Support Fund, along with local governments.
Department of Planning and Budget Warns of Broader Financial Impact
Despite the potential for new revenue streams, critics of the bill have warned about its broader financial implications. This sentiment was particularly echoed in the fiscal report issued by the Virginia Department of Planning and Budget on Monday.
The committee appeared open to feedback from the work group, yet the fiscal note expressed skepticism about the proposed gambling expansion. Concerns were raised about how the introduction of online casinos could cannibalize existing revenue from the state’s iLottery, which was launched in 2020.
“Legalization of iGaming will create new tax revenue from that activity, but is not projected to outpace the reduction in revenues from iLottery profits and taxes on casino gaming,” the fiscal note argued. It further highlighted that mobile sports wagering could also be seriously affected, as tax revenues from sports betting are directed to the General Fund, similar to the proposed iGaming taxes. This overlap could lead to a reduction in transfers to the Lottery Proceeds Fund, ultimately impacting the General Fund.
While the note highlighted these concerns, it also admitted a lack of concrete data to fully assess the financial impact, opting to assign a minimal impact estimate of $50,000.
Virginia Lottery ‘Would Not Be Able to Handle It’
The Gaming Committee Chair, Paul Krizek, also shared his concerns about the proposal, arguing that many critical questions still need to be answered. Krizek noted that Virginia’s gambling industry is experiencing rapid expansion, with some of the five approved casinos already operational, others under construction, and the Petersburg casino just recently approved via referendum last fall.
Given the fast-growing land-based industry and the addition of sports betting, Krizek argued that the Virginia Lottery is already stretched thin. “Even if we wanted to pass this right now, it would be setting up for failure, because they would not be able to handle it. It would be too much,” he stated.
With the current session being an odd-numbered year, lawmakers have only 30 days to address proposals, which further complicates the situation.
“I think the point in introducing this this year, though it’s a short year, is to sort of lay out a framework and give us a straw man to sort of start poking at, and I think you started poking a little bit,” said Virginia Delegate Marcus Simon. “But I think none of the issues that you’ve raised are insurmountable. I think that working with the other stakeholders and the work group, we can get to something that’ll be probably very palatable in 2026.”
The Virginia Criminal Sentencing Commission also released a statement and expressed that while they only had little historical data to work with, the new bill would lead to an increase in crime and related correctional services.
Lottery Doesn’t Have to Suffer
Supporters of the bill have maintained that introducing online gambling to the Old Dominion wouldn’t have a serious impact on its lottery. There have been multiple studies that show fears about negative impacts on lottery sales may be overstated.
For instance, Pennsylvania experienced record-setting lottery sales in fiscal year 2021, surpassing $6 billion, which included online lottery play. Interestingly, revenue from sports betting and online casino gaming also exceeded previous records during this period, suggesting that these forms of gambling can coexist without harming each other.
The same was also witnessed in New Jersey, where the lottery regulator reported a notable increase in revenues after the legalization of sports betting in 2018. There have also been reports that show that online sports betting revenues are often positively associated with lottery revenues.
As Virginia lawmakers consider the proposal, the evidence from other states may offer reassurance that the introduction of online gaming could benefit both the state’s economy and its lottery system with proper management.
The proposal is now expected to be reintroduced into the House for consideration by 2026.
Source: Next.io
