The Virginia Lottery Board recently approved sports betting regulations. The legislation legalizing sports betting passed on April 22 and took effect July 1 and since then the lottery board, which was designated to regulate sports wagering, created the framework and released draft rules for public comment in July and August. The public weighed in, the rules were tweaked and the board approved them on September 15.
Virginia Lottery Board Executive Director Kevin Hall said, “Creating a regulatory structure for sports betting within the aggressive timeline that was mandated by the legislature consumed a lot of bandwidth over the summer, and today’s board action will represent a really significant step forward.” Sports betting is projected to generate up to $55 million in annual state tax revenue.
The approved regulations will take effect as soon as there are posted to Virginia Register in early October. Sports betting permit applications will be accepted October 15 through midnight October 31; state legislation allows for four to 12 sports betting permit holders. Permit applicants also can start applying for licenses for their principals, vendors, suppliers and employees on October 15. Each application will be subject to a 90-day review period; a consultant has been hired to assist in that process.
Lottery Deputy Director for Gaming Compliance Gina Smith explained, “So an applicant will have to provide us all the documentation that we’re requesting prior to us deeming it complete. Once it’s completed, we’ll do our investigations and our due diligence and within 90 days issue a decision.” Smith said she hopes operators will be up and running by January. At first, sports betting in Virginia will be online, primarily through mobile apps.
The lottery received 183 comments on draft regulations during the public comment period—many on the final day, September 9. Those commenting included DraftKings, FanDuel, Penn National Gaming and BetMGM. The National Football League, National Basketball Association, Major League Baseball and the Professional Golf Association also commented.
Changes were made, based on public comments, in the areas of self-exclusion, bonds, permissible wagers, system integrity and security assessment, minors and prohibited players, advertising and marketing, geolocation and the sports betting consumer protection program, including the bettors’ bill of rights.
Definitions of certain terms, including college sports, gross revenue, prohibited conduct, affiliate, affiliated marketer and principal, also were clarified. For example, commenters expressed concern about the $50,000 licensing fee for each “principal” above and beyond the $250,000 licensing fee. Operators said the original description of a principal as someone with “managerial capacity” could apply to anyone from the chief executive officer to a shift manager, thereby significantly raising licensing fees. Smith clarified a principal was defined as a person critical to the high-level operation of the business. Other employees of sports betting operations will pay a $500 fee for a 3-year license.
Additionally, an information security system section was added that “requires the permit holder to implement, maintain, review and revise and comply with a comprehensive information security system to protect data.” And a section on identification cards was deleted since operators will be online.
The lottery board declined to allow betting on Olympic sports. Smith said, “We did not adopt that recommendation. We reviewed the definitions and because Olympic sports include minors, we were concerned about going outside the bounds of the statute.” She said the legislature could revisit the issue later.
DraftKings Director of Global Communications and Public Affairs James Chisolm said, “Virginians are ready to bet on sports legally. We all share a common goal of creating a robust, dynamic, customer-centric sports betting market in Virginia that generates much-needed tax revenue for the commonwealth, and pulls thousands of Virginians, who are already regularly betting on sports, off of illegal platforms, which offer no consumer protections or responsible gaming resources.”
