A first-ever bill seeking to authorize and regulate casino-style online gambling in Virginia has already been set aside for the 2025 calendar year, just days after receiving its first committee assignment.
Virginia State Senator Mamie Locke has asked for her authorization measure, Senate Bill 827, to be pulled from consideration in the face of early opposition from interested parties, including the state's lottery.
On Monday, Locke requested that Virginia's Senate Subcommittee on Gaming postpone discussion on the bill. Locke, according to local news outlets, cited the need for additional study, less than two weeks after being formally introduced for the 2025 session. The bill had been pre-filed in late December and received its first legislative notice on January 8.
“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.”
Lottery interests oppose perceived market competition
Locke's SB 827 received two impact statements since its introduction, both of which skewed negatively toward iGaming in the state. The first was an impact statement from the Virginia Criminal Sentencing Commission, which stated that despite having little historical data to work with, some increase in crime and related correctional services would be expected.
The VCSC put a placeholder value of $50,000 into its statement, the minimum figure allowed, while stating, "The estimated amount of the necessary appropriation cannot be determined for periods of imprisonment in state adult correctional facilities" [at this time].
Virginia's Department of Planning and Budget, in a more forcible impact statement filed yesterday, cited an expectation that overall revenue produced through the state's lottery would decrease.
As part of its top-line Fiscal Summary, the Planning and Budget impact statement declared, "This bill will create new revenues for the General Fund and Problem Gambling Treatment and Support Fund, and could reduce revenues to the Lottery Proceeds Fund and School Construction Fund, due to negative impacts on lottery sales and profits, and casino gaming taxes. The Virginia Lottery indicates the net impact to all Commonwealth revenues is expected to be negative."
By way of explanation, the statement offered market research indicating the lottery's belief that some online cannibalization would occur: "The Lottery indicates states with both iLottery and iGaming experience lower iLottery sales and profits, and lower rates of growth, compared to states with only iLottery. Information, including reports from Eilers & Krejcik, show that the average annual growth in total iLottery sales is higher in states with only iLottery, compared to states (Michigan and Pennsylvania) with both iLottery and iGaming, (US iLottery Tracker – 1Q24).
Other concerns add to legislative hesitancy
The statement further explained that the tax rates proposed in Locke's SB 827 were also insufficient to cover the expected costs of administering expanded iGaming in Virginia. Between that and the expected negative impact on Virginia's lottery offerings, the statement declared that would-be online operators should pay more in fees and taxes, which could be handled in several different ways.
The Budget and Planning statement delved into other concerns as well, such as the creation of new Class 5 and Class 6 felonies for iGaming-related crimes. It acknowledged the $50,000 placeholder value offered by the VCSC but made clear the overall criminal impact could be larger.
Faced with the lottery-led pushback and the lack of an immediate fallback position, Sen. Locke had few options other than to shelve the bill for the time being. The quick demise of SB 827 doesn't offer glowing hopes for 2025 to be a breakout year for state-level iGaming expansion across the year, following a 2024 when no new states approved new online casino-style gambling.
