Regulated internet gaming legislation in Virginia narrowly passed the Senate on 16 February.
Senate Substitute SB118S2 changes the law of Virginia to legalize and regulate internet gaming through the Virginia Lottery Board. At the same time, it introduces a new Article 12 in Chapter 41 of Title 58.1 which highlights the licensing, taxation, enforcement, consumer protections, and gaming revenue allocation aspects of online casino-style gaming.
The amendments attracted more supporters to the bill after it was almost completely blocked in January. Only local casino operators in eligible host cities will be able to apply for an online gaming license.
The first licensing fee is $500,000, and the license will be valid for five years or the remaining term of the casino license, whichever is shorter. Third-party platform providers are required to pay $2 million as an application fee, besides renewal costs. Each operator is permitted a maximum of three branded platforms, with a possible fourth if paired with a qualified entertainment firm.
Applicants are required to submit a plan showing how the potential job losses due to the expansion will be mitigated.
The bill sets forth tough age verification (21+), geolocation rules, responsible gambling measures, advertising restrictions, and heavy penalties. Running a business without a license is treated as a felony.
The Virginia Lottery Board must finalize its regulations by 1 January 2027, and the law becomes enforceable on 1 July 2027. There is no clause for a date earlier than this, so the launching of online gaming is not permitted before that time unless a new amendment is made.
The legislation levies a 15% tax on the adjusted gross online gaming revenue. Out of this, 5% goes to the Problem Gambling Treatment and Support Fund, 6% to the Internet Gaming Hold Harmless Fund until 1 January 2030. The remaining 89% is credited to the state’s general fund. After 1 January 2030, the share of the general fund rises to 95% as the Hold Harmless allocation terminates. The fund set-up changes once that support fund disappears.
In procedural terms, the Senate engrossed the bill on 12 February in the process of finalizing and preparing the amendments for the third reading. On 16 February, the bill was brought to the floor and the first reading of the bill failed. On the same day, the senators voted 380 to reconsider the loss and revive the motion that had been obstructing the bill, thus paving the way for another try. At the reborn third reading, the measure got the green light.
Those vote margins say enough about the issue. There is some support, but the opposition is still quite strong as the latter still clearly constitutes a majority in the chamber.
The proposal is now heading to the House of Delegates where it will be evaluated again and where the possibility of delays or a further downturn still remains.
