Lawmakers filed two pieces of legislation this past week, including one addressing the in-state college betting ban, that would alter specific regulations in the Virginia sports betting market. They could also lead to an increase in revenue for the commonwealth’s coffers.
Gamblers are currently prohibited from wagering on the University of Virginia, Virginia Tech and other colleges and universities located in VA. Additionally, operators are not required to report revenue stemming from promotional bonuses they give to their customers.
Both of those rules could change if the proposals pass.
In-state betting ban hurts bettors and sportsbooks
On Wednesday, Del. Schuyler T. VanValkenburg, a Democrat representing Virginia’s 72nd District in the House of Delegates, introduced HB 1127. The bill would allow sportsbooks to accept bets on Virginia universities’ college sporting events.
There are 14 NCAA Division I college athletic programs in Virginia. Some of them having loyal, diehard fanbases, including the Virginia Cavaliers, Virginia Tech Hokies and Liberty Flames, for example.
By including Virginia colleges in the pool of eligible teams to bet on, there could be an influx of new casual bettors that are looking to put money on their favorite college team. As a result of the potential capital inflow, gaming and tax revenue could significantly increase.
VanValkenberg’s proposal would permit only betting on the event’s outcome. Proposition bets involving Virginia colleges would remain banned as part of the bill. These “props” are bets that are not directly tied to the game’s outcome. For example, wagering on an individual player’s points or rebounds total are common prop bets.
There is also a companion bill in the upper chamber. The Senate referred SB 576 to the Senate Committee on General Laws and Technology. However, the House of Delegates did not assign HB 1127 to a committee yet.
Changing tax reporting requirements for operators
A fellow Democrat, Del. Mark Sickles, also filed a bill this past Wednesday that would alter Virginia’s sports betting rules.
Sickles filed HB 1103 on the first day of the 2022 legislative session. The bill would require operators to list bonuses and promotion spending as taxable revenue. According to the bill’s summary, it would prohibit sportsbooks from carrying over losses when it is calculating its tax bill.
“(HB 1103) prohibits sports betting operators from excluding bonuses and promotions from taxable revenue after the first 12 months of wagering activity. The bill also eliminates the ability of sports betting permit holders, when calculating taxable revenue, to carry over losses on a monthly basis.”
Sickles’ proposal would keep the current tax rate of sports betting revenue at 15%. In November, the most recent month with sports betting data, the state collected $4.2 million from sports betting operators. That total shattered the previous record.
Virginia’s 11 licensed sports betting apps combined to accept $402.6 million in total wagers in November. They reported adjusted gross revenues (AGR) of $29.9 million, which is the taxable amount. Adjusted gross revenue is the gross gaming revenue minus the federal excise tax and the promotional money.
If the legislature adopts the changes in the tax structure, revenue for Virginia will inevitably increase. However, it could hurt the consumer by disincentivizing sportsbooks from offering those promotions like free bets and deposit bonuses.
Virginia is already one of the biggest and fastest-growing markets in the country. In October, it became the quickest state to reach the $2 billion mark in total sports betting handle when sportsbooks accepted $427.3 million in sports bets.