A joint subcommittee in Virginia is weighing whether or not to establish a regulatory agency designed specifically for gaming as the state also considers adding new verticals.
Virginia lawmakers created a joint committee in 2023 to study the feasibility of establishing the Virginia Gaming Commission, which would oversee regulated sports wagering and other forms of commercial gaming. Currently, state-sanctioned sports betting and casino gaming is regulated by the Virginia Lottery. Lawmakers established a joint subcommittee to consider a regulatory body for non-lottery gaming in the wake of concerns regarding the Virginia Lottery’s ability to comprehensively regulate multiple verticals.
“The Virginia Gaming Commission is a step we need to preserve the good, address challenges and build a fair, accountable and prosperous gaming industry for everyone in the Commonwealth,” Del. Paul Krizek told joint subcommittee members on Tuesday.
Virginia’s regulation model for gaming
Under active Virginia law, the state’s lottery board regulates sports betting, iLottery and casinos while the Department of Agriculture and Consumer Services oversees charitable gaming and daily fantasy contests. Live horse racing, historical horse racing and advance-deposit wagering in Virginia are regulated by the Virginia Racing Commission.
The Virginia Division of Legislative Services recommends placing all forms of gaming except for lottery and iLottery under the proposed Virginia Gaming Commission.
The joint subcommittee is discussing the potential establishment of the Virginia Gaming Commission, along with pieces of legislation that propose authorizing online casinos.
Lawmaker wants regulated iGaming in Virginia
The joint subcommittee discussed House Bill 2171, a measure introduced earlier this year by Del. Marcus Simon that aims to authorize online casino gaming with regulation by the Virginia Lottery. HB 2171 was referred to the Committee on General Laws before being assigned to the General Law subcommittee for the Virginia Alcoholic Beverage Control Authority, which handles legislation related to electronic and charitable gaming.
The subcommittee recommended laying the bill on the table, effectively ending its chances of becoming law. A fiscal note raised cannibalization concerns regarding online casinos and iLottery, with iLottery being an important revenue source for Virginia. According to the Division of Legislative Services, iLottery operations in Virginia posted $2 billion in handle between July 2022 and June 2023.
Despite HB 2171 failing, Simon and joint subcommittee members discussed the potential regulation of online casinos in Virginia to combat illegal and offshore gaming in the state.
“We’re not creating a new category here with iGaming,” said Simon. “My goal is to bring it under a regulated umbrella where we can have some oversight of it and supervision.”
Cannibalization addressed in joint subcommittee hearing
Simon also notes the ability to generate additional revenue through online casinos. Virginia can capture revenue from iGaming that is currently being siphoned through illegal gaming.
According to data provided by Simon, Virginia is projected to generate up to an additional $5.3 billion in new taxable revenue over a five-year period from online casinos. The estimates also take into consideration brick-and-mortar casino gaming and thwart cannibalization concerns with land-based casino revenue projected to grow by roughly 8.4% during the same period. Land-based casino revenue could reach up to $1.6 billion.
Former New Jersey Division of Gaming Enforcement Director David Rebuck also addressed cannibalization concerns to joint subcommittee members.
“Some in the state [New Jersey] were very wary of a new technology such as iGaming that could impact the status quo of casino operations,” said Rebuck. “There were fears casino workers could lose their jobs and that the supporting industries around casinos would suffer. . . iGaming demonstrated itself to be complementary to the existing forms of gaming and critical to sustaining the growth of the land-based casinos.”
Problem gambling and illegal operators raise concerns
Illegal gaming and problem gaming concerns were also discussed during the joint subcommittee hearing with representatives from the Sports Betting Alliance in attendance to share data related to revenue lost by illegal gaming and potential profits from legalized online casinos. Safer Gambling Strategies founder Keith Whyte also shared his pros and cons of iGaming and the benefits of establishing a new regulatory body.
“We need to step up enforcement,” said Whyte. “I would love to see Virginia issue cease and desist letters to some of the illegal operators that other states have done. Having a dedicated gaming commission is the first step towards getting that enforcement.”
The joint subcommittee will continue to consider a new regulatory agency for gaming, along with online casinos. The committee can study the feasibility of a new regulator until Nov. 30. The group also plans to discuss casino gaming in Virginia in the coming weeks.
