It looks like one state’s push to legalize online casinos in 2025 is already all but over in the House and the Senate.
Bill sponsor and Virginia Delegate Marcus Simon said Tuesday’s brief hearing was a victory even though the end result was an effective punt on the effort to legalize online casinos until next year. The bill was “gently tabled” and the committee will ask its work group to investigate the issue.
Simon presented HB2171, the House companion to SB827, which would allow each casino in the state to have up to three online casino skins on a license at a tax rate of 15%.
On Monday, Sen. Mamie Locke, the sponsor of SB827, also recommended pulling the legislation until next year.
“After introducing this bill, we have decided it requires further study on this issue,” she noted. The Senate similarly agreed to write a letter on the issue to the legislative work group.
Gaming committee wants to hear more about online casino impact
“I think what your’e going to see is that there’s so many questions that we need to send this for a study,” Gaming Committee Chair Del. Paul Krizek warned Simon.
DraftKings Senior Government Affairs Manager John Mohrmann was on hand to offer brief testimony in support of the bill and answer questions. Krizek used the opportunity to ask whether or not the 2.5% of revenues set aside for the problem gambling fund in the bill was in line with industry norms and suggested he would like to see that number raised to 5%.
Mohrmann noted that 2.5% is on the higher side of revenue a state put aside for PG funding and also provided some context about where the proposed 15% tax rate lands among existing igaming states, which was right around the average rate.
Virginia Lottery already has ‘too much’ to do
Krizek went on to note that Virginia’s gambling industry is currently in a rapid period of expansion, with some of the five approved casinos in the state live, some under construction and some, like the Petersburg casino, only recently approved by referendum this past fall.
With the nascent land-based industry in addition to sports betting, Krizek argued the Virginia Lottery is already dealing with too much even if there were an appetite to rush an online casino bill through this year.
“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.”
Being an odd-numbered year, there is a limited amount of time for lawmakers to get much done this session, which will only last for 30 days.
“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,” Simon said. “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.”
Fiscal note on online casinos worried about ilottery
The committee seemed open to hear feedback on the idea from the work group but the fiscal note issued Monday on the bill was less optimistic about the proposed gambling expansion.
Virginia regulated and launched ilottery sales in 2020 and there are concerns online casino would cannibalize that important revenue source for the state.
“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. Mobile sports wagering and resulting tax revenues could also be affected by the offering of iGaming; because sports betting taxes are directed to the General Fund (same as this bill directing taxes from iGaming), those impacts would be more directly offsetting. Reduction of transfers to the Lottery Proceeds Fund could have a potential impact to the general fund,” the fiscal note argued.
Though the note expressed concerns, authors cited a lack of data to be able to fully calculate a number in terms of financial imapct and opted to assign it the minimum impact of $50,000.
Cannibalization of land-based casinos has been a recurring argument of online casino critics, but lottery operators are increasingly concerned about online casinos impacting lottery sales, particularly if ilottery is available in a state..
