Virginia Governor Ralph Northam signed two bills legalizing sports betting in the state. Due to the Covid-19 pandemic, the General Assembly and Senate met in separate tents on the statehouse grounds for a 1-day reconvened session, reapproving HB 896 and SB 384 with Northam’s recommendations, which state Rep. Mark Sickles said were “largely administrative.” The measures will take effect July 1 and sports betting could launch later this year, following the Virginia Lottery Board’s completion of regulations by September 15.
Under the legislation, sportsbooks will pay $250,000 for a 3-year license. Revenue will be taxed at 15 percent. Between four and 12 online licenses will be available. Northam wanted the state’s two NASCAR tracks included; they each could apply for a sports betting license or partner with a licensed sportsbook operator.
The legislation does not allow betting on in-state colleges, however Northam clarified that betting on tournaments including those schools would be allowed. The law also mandates using official league data to settle in-play betting.
One area of contention was Northam’s requirement that, in addition to high licensing fees, interested sportsbook operators pay $50,000 for background checks on each principal of their company. Some operators may have up to 20 employees who could be considered principals. State Senator Jeremy McPike said during the regulatory process, the lottery will clarify who actually is a principal.
The sports betting bills were part of a package that allows the development of five $3 million-plus casinos, one each in Portsmouth, Danville, Richmond, Norfolk and Bristol, with local voter approval. One of Northam’s amendments required the state to use its portion of any new tax revenue from the planned casinos for school construction and repair.
The five planned casinos could produce a total profit of about $970 million within five years, analysts said. That would provide the state with $114 million in tax revenue, plus $65 million for the host communities and their surrounding regions.
The Pamunkey Tribe also may build casinos in both Richmond and Norfolk. Colonial Downs racetrack, which offers historical horseracing machines and operates several Rosie’s Gaming Emporiums, also is bidding for the Richmond casino. The casinos, Colonial Downs racetrack and professional sports teams headquartered in Virginia all could receive mobile sports wagering licenses.
In Bristol, businessmen Jim McGlothlin and Clyde Stacy have partnered with Hard Rock International to turn the vacant Bristol Mall into the $400 million Hard Rock Hotel & Casino Bristol. Forecasts predicted the venue could generate $7.8 million annually for Bristol and its 17,000 residents, and produce $15 million for the state.
In a statement, McGlothlin and Stacy said, “We find ourselves in even more difficult economic conditions than when this legislation started and completion of this project could not come soon enough considering the overall economy of our city and nation at this time. The resort project is definitely worth pursuing by our city and all the hard work is worthwhile if we accomplish the end result.”
The Eastern Band of Cherokee Indians and real estate developer Steve Johnson also want to develop a casino at the Pinnacle shopping complex, owned by Johnson, located in the Bristol area but not in Bristol County, the area approved by the legislation.
Chicago-based Rush Street Gaming most likely will develop the casino in Portsmouth, and several casino operators are competing for the Danville venue.
Meanwhile, Virginia Lottery profits fell 25 percent to $48 million in March, comparted to March 2019. Year to date, the Lottery has taken in $439.8 million in profits, down 11 percent from 2019. Last July the Lottery, which supports K-12 education, announced record annual profits of $650 million.
Regarding the Covid-19 pandemic, Lottery Executive Director Kevin Hall said, “The Lottery field team of sales representatives continues to work remotely to service retailers and prize drawings continue to occur. Essential employees have maintained ongoing operations necessary to continue the generation of profits for K-12 public education, though sales and profits have been significantly diminished due to the public health emergency and the related economic instability.”
Hall said the Lottery waived fees for retailers who stop selling Lottery tickets, canceled advertising and emphasized ways to play that minimize person-to-person contact, such as self-serve vending machines.
Northam issued a statewide shutdown order in mid-March. Since then, officials said the Lottery had been closely tracking its revenue forecast for the year, posting “significant impacts on sales and profits” in the last two weeks of March. “That slowdown has accelerated into April, and we estimate sales of all lottery products have declined 20 percent to 25 percent compared to forecast during a period that is typically the Lottery’s highest seasonal period. We anticipate lottery profits will fall behind the forecast with April’s results, and those declines can be expected to continue through the remainder of this fiscal year.”
Also during the reconvened session, lawmakers approved allowing games of skill to be legally offered by venues in Virginia until July 2021. Northam said he’ll veto any subsequent legislation extending the date for the so-called “grey zone” games to operate past that date. In exchange, venues must pay a monthly tax of $1,200 per machine, which could generate $150 million for a Covid-19 relief fund for small businesses.
