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Virginia Examines Online Gaming within JLARC Study

Written by Jennifer Newell
Last updated on
Virginia

The state of Virginia has been moving at a steady pace toward its plans for gambling expansion.

A bill to allow said expansion passed and was signed into law in March. Less than two months later, the Virginia Joint Legislative Audit and Review Commission (JLARC) had already appointed a firm to conduct a study of gambling options.

That study was delivered several months later, and JLARC delivered its 202-page report to the Virginia legislature and Governor Ralph Northam.

While online gaming was not determined to be of “negligible economic impact,” it is on the radar of lawmakers and other state officials overseeing gambling expansion in Virginia.

?ref_src=twsrc%5Etfw”>November 25, 2019

A Year of Legalization and Consideration

When lawmakers in Virginia decided to expand gambling possibilities to make way for casinos, they wasted little time in pursuing their goals.

The bill was introduced in late 2018 and went up for debate and consideration in early 2019. In little more than two months, the SB.1126 passed both houses of the legislature and traveled to the governor’s desk on March 11. Governor Northam signed it on March 22.

The bill “authorizes casino gaming in the Commonwealth to be regulated by the Virginia Lottery Board. Casino gaming shall be limited to certain cities that meet the criteria that is outlined in the bill, and a referendum must be passed in the city on the question of allowing casino gaming in the city.”

Less than two months after the bill became law, the Virginia Joint Legislative Audit and Review Commission (JLARC) performed its duty as outlined in the bill. This started with hiring a company to study the prospects of gambling in Virginia and help map out a path forward.

Study Overview

“Gaming in the Commonwealth” was published on November 25.

?ref_src=twsrc%5Etfw”>November 26, 2019

Some of the primary findings were of an economic nature. Full resort-style casinos in the five localities – Bristol, Danville, Norfolk, Portsmouth, and Richmond – are likely to generate approximately $260 million per year in state gaming taxes. The report noted that the revenue will have a “positive but modest economic impact on local economies.”

Each casino is expected to employ at least 1,000 people and positively impact tourism business. These will be more meaningful for the smaller cities of Danville and Bristol simply due to size.

The study also examined the addition of another casino in Northern Virginia that would increase annual revenue from taxes by $155 million and employ an additional 3,200 workers due to its size and scope.

On the other hand, the study found that the historical horse racing industry in Virginia is likely to suffer, as casinos will inevitably take some of their customers and revenue – as much as 45% of them. Lottery and charitable gaming proceeds are likely to decline only slightly – between 3.6% and 4%.

?ref_src=twsrc%5Etfw”>December 2, 2019

What About Online Gaming?

When the bill passed earlier in 2019 to legalize casinos, there was also a provision that called for the inclusion of online gaming and sports betting.

Per the law, casino gaming includes numerous casino games like poker and slot machines, table games and keno, as well as sports betting and online gaming. Those activities are now legal in Virginia.

Thus, they were included in the Innovation Group study and resulting JLARC report.

“A fully developed sports wagering industry in Virginia could generate up to $55 million in annual gaming tax revenue for the state, depending on how it is structured, and online casino gaming could generate about $84 million each year. Unlike online casino gaming, which would most likely depend on the opening of casinos, sports wagering could be implemented without casinos and could be offered sooner.”

Further in the report, online casino gaming was determined to possibly have a “moderate positive fiscal impact” for Virginia, as a fully mature market would likely generate $312 million in net gaming revenue per year. However, the finding is that this would not have a “material economic impact” because its automated nature would produce few jobs.

It is also noted in the report that online casino gaming would not negatively impact brick-and-mortar casino revenue, as demonstrated by the New Jersey market.

Numerous Recommendations

The report determined that several actions should take place as the process moves forward toward the licensing and building of casinos.

The legislative recommendations include:

–Establish dedicated, stable funding for problem gambling prevention and treatment.

–Require casino licensees to submit responsible gaming plan with applications.

–Owners and officers of casino operator applicants must pass background and financial checks.

–Increase Virginia Lottery Board members from five to seven.

–Broaden Board members’ responsibilities and training for additional gaming.

Next Steps

If the legislature decides to add any of the above recommendations to the new gambling law, this could happen as early as January or February 2020.

The Virginia Lottery Board will need to write and publish its official regulations for the new casino industry. This could take many months, at least through the first half of 2020. While applications could be accepted in 2020, it is unlikely that licenses will be issued and building plans put forward until 2021.

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