Virginia Lawmakers Pass Casino, Sports Betting Bills

In an overtime session, Virginia legislators OK’d bills legalizing sports betting and allowing casinos in five cities. They now go to Governor Ralph Northam (l.), and must also pass muster in voter referendums.

After extending its legislative session one day, Virginia lawmakers last week approved bills to legalize casinos and sports betting.

A battle broke out over whether the state should allow wagers on college games involving Virginia teams. A compromise was reached, with lawmakers agreeing to prohibit betting on Virginia colleges and universities, in return for lowering the tax rate on sports betting revenue from 17.5 percent to 15 percent.

The measure also requires the use of official league data and bans prop bets on any individual collegiate athlete.

The sports betting and casino bills now await the signature of Governor Ralph Northam, whose spokesman said, “The governor’s philosophy has always been that Virginia needs to be thoughtful in its approach. If we are going to expand gaming, we must do so responsibly.”

If Northam signs the legislation, sports betting could launch with mobile apps and websites by the end of the year. Casinos would take longer, since voter referendums would be required in the five approved cities: Bristol, Danville, Portsmouth, Norfolk and Richmond. Those referendums could take place in November.

The bill calls for the Virginia Lottery to oversee sports betting. The lottery director may issue four to 12 permits, with sportsbooks paying $250,000 for a three-year permit. Renewals would cost $200,000. Established sports betting operators like FanDuel and DraftKings would be eligible, as well as other gaming interests, such as Colonial Downs and companies creating casino sportsbooks.

Another provision in the bill allows professional sports to set up their own sports betting platforms, as long as they’re headquartered in Virginia. This would allow the Washington Redskins to offer sports betting if the team builds its new stadium in Virginia.

The measure also would allow Colonial Downs Group, owners of the New Kent County horseracing track plus satellite facilities with off-track betting and historical horseracing machines, to add another 2,000 machines to its 3,000 limit, including 1,650 at a new venue in Dumfries.

Colonial Downs lobbied for the extra machines to protect itself from the financial blow it could take when casinos open. “The final outcome helps to protect the 300-million-dollar investment we have made in the Commonwealth and the more than 1,000 employees we have hired,” Colonial Downs Group said in a statement.

The gaming legislation also lowered the taxes assessed on sports betting to 15 percent of adjusted gross revenue. Of that, the state would set aside 2.5 percent for problem gaming assistance, and the balance would go to the state’s general fund.

The casino bill was a re-authorization of a bill passed last year, allowing up to five casinos in the state. State Senator Louise Lucas, sponsor of the casino bill, said lawmakers finally realized how much money Virginia has been losing to neighboring states. “It was just like a huge sucking sound—ching, ching, ching—our cash just leaving Virginia,” Lucas said.

After intense discussion, lawmakers eventually agreed to a tiered tax structure: a casino with adjusted gross revenues of up to $200 million would be taxed at 18 percent; between $200 million and $400 million, 23 percent; and more than $400 million, 30 percent. Cities would receive 6 percent of the first $200 million in adjusted gross receipts, between $200 million and $400 million, 7 percent and more than $400 million, 8 percent.

In addition, the bill stipulates if a Virginia Indian tribe operates a casino, 1 percent of tax revenues would go to the Virginia Indigenous People’s Trust Fund. Eight-tenths of a percent would go to the Problem Gambling Treatment and Support Fund, and .2 percent would go to the Family and Children’s Trust Fund. The balance would go to the state’s general fund.

The Pamunkey Tribe, which plans to build a casino resort in Norfolk and another in Richmond, issued a statement saying it 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.”

Norfolk signed a development agreement with the tribe in January, but the Cordish Cos., operators of Norfolk’s Waterside District, has threatened to sue the city if it doesn’t terminate its agreement with the tribe. A lawyer representing Cordish stated the city is in “material breach of multiple provisions” of its agreement with Cordish, and that the city must make the necessary changes within 90 days. The attorney said Cordish’s agreement with Norfolk in 2013 to redevelop the Waterside District included language allowing the company to expand the complex into a casino if gambling became legal in Virginia.

A separate piece of legislation, allowing lottery tickets to be sold online, was signed by Northam. The measure passed the legislature on February 20 and takes effect July 1. Lottery Board spokesman John Hagerty said, “We appreciate the overwhelming bipartisan support in the General Assembly. This legislation benefits the consumer and enables the lottery, just like any business, to meet its customers where they are. It makes the lottery relevant for consumers who expect to be able to do everything on their smartphones.”

Virginia will become the seventh state to offer online lottery sales, after Georgia, Illinois, Kentucky, Michigan, New Hampshire and Pennsylvania. Bill sponsor state Senator Tommy Norment said the legislation was designed to expand lottery sales in anticipation of casinos in five cities.

Virginia Lottery sales have grown an average of 5 percent annually for the past 10 years, reaching $2.3 billion and contributing nearly $650 million to public education in fiscal 2018-19. The 2019 joint legislative report indicated the lottery could lose 3.6 percent or $105 million in sales in 2024, the first year all five casinos are projected to begin operation.