Virginia online casino bill halted days after arrival
Senate Bill 827 introduced by Senator Mamie Locke, hoped to authorise the Virginia Lottery Board to issue licenses for online casino gaming operators. This move would significantly reshape Virginia’s gaming landscape.
The bill was set to be discussed by the Senate Subcommittee on Gaming earlier this week. However, according to the Virginia Mercury, Senator Locke requested a delay, explaining that there is ostensibly a need for more comprehensive research.
She noted that the bill is designed to create a regulated and secure market for online gambling in Virginia, but further analysis is necessary to ensure the legislation’s success and sustainability.
The proposed legislation, which was buried a day before the Virginia Senate approved several controversial measures, outlined a licensing process that would require operators to pay a $1m application fee. Additionally, iGaming operators would face a 15% tax on their earnings.
The generated revenue would be allocated to various state and local funds, with 2.5% earmarked for the Problem Gambling Treatment and Support Fund and 97.5% directed to Virginia’s General Fund. Local governments would also benefit from these revenues.
The proposal is now expected to be reintroduced for consideration by 2026.
Striking a chord
While the bill promises to open new revenue streams for the state, it has sparked concerns about its broader financial impact. A fiscal analysis conducted by the Virginia Department of Planning and Budget cautioned that internet gaming could potentially cannibalise existing revenue sources.
The report warned that online gaming could lead to decreased earnings from the Lottery Proceeds Fund and School Construction Fund due to reduced lottery sales and casino gaming tax revenues.
Similarly, the Virginia Lottery projected a net negative impact on overall state revenues.
This projection stems from concerns that online gaming might divert consumer spending from traditional lottery games and physical casino establishments, both of which contribute significantly to state funding.
Coincidentally, Virginia is in the process of building its land-based casino market, with five casinos planned across the state. Studies, including one by the Brookings Institution have shown that land-based casinos may have an impact on lottery sales.
Much ado about nothing
The proposal has drawn mixed reactions from stakeholders. Proponents argue that legalising and regulating online gaming could boost state revenues while providing a safer and more controlled environment for players.
Critics, however, emphasise the need to carefully balance new gaming opportunities with the potential risks to existing revenue sources and community well-being.
Multiple studies have already shown that the fear of those risks may be overblown.
Pennsylvania experienced record-setting lottery sales in fiscal year 2021, surpassing $6bn including online lottery play. Notably, revenue from sports betting and online casino gaming also far exceeded previous records.
The popularity of legal sports betting and online casino options in Pennsylvania did not have a discernible negative effect on lottery revenues, suggesting that these forms of gambling can coexist and even thrive together.
Similarly, following the legalisation of sports betting in 2018, New Jersey witnessed a significant increase in lottery revenues.
In fiscal year 2021, the New Jersey Lottery reported its most successful year to date, with revenues increasing by 14.6% over the previous year to an all-time high of $3.68bn.
This surge occurred despite the rapid growth of regulated sports betting in the state, indicating that the availability of legal sports betting did not diminish lottery spending.
Another study examining the impact of sports betting on casino and lottery revenues found that online sports betting revenues are “positively associated with lottery revenues.”
This suggests that the introduction of online gambling options may attract a different demographic, thereby expanding the overall market without negatively impacting existing lottery sales.
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