The accelerated process to determine regulations for Virginia sports betting officially kicked off Wednesday with partial regulations released for public comment.
That acceleration will not include VA sports betting in 2020, however.
The bill legalizing sports betting officially became law July 1, but the Virginia Lottery has fewer than four months to build regulations. The law stipulates final regulations must be approved by the board no later than Sept. 15.
“I’ve compared this accelerated rulemaking process to building the airplane while flying it,” Virginia Lottery Executive Director Kevin Hall said.
One change from the preliminary schedule is that sports betting in Virginia is now expected to go live in early 2021. The Virginia Lottery originally planned to accept the first applications in late September, but that will now take place in the latter half of October. The Lottery has 90 days to consider each application.
No minimum hold for Virginia sports betting
One piece of news that came out of the first Virginia Lottery board meeting on sports betting is that there will be no mandatory hold.
The enabling legislation was heavily influenced by Tennessee, but the most controversial bit of sports betting in the Volunteer State – a mandatory 10% minimum hold – will not be included.
“We’re still working through a lot of those operational details but I think it’s safe to say we won’t be doing that in Virginia,” Hall said. “There was some controversy when Tennessee proposed [the mandatory hold.]”
Because sports betting margins are slim, operators might have to adjust their pricing to meet a mandatory hold. That could potentially the state’s regulated sportsbooks “less competitive than what a customer can already find on an unregulated, offshore sportsbook,” Hall said.
An Eilers & Krejcik study earlier this year posited Tennessee could lose millions of dollars in revenue from the rule.
VA sports betting regulation details
The initial regulations released by the Virginia Lottery touched on a couple of key areas:
- The application process for sportsbooks and principals of the company.
- The self-exclusion program.
- The sports betting consumer protection program and the Virginia Sports Bettors’ Bill of Rights.
The other regulations will touch on system requirements, financial controls, and permissible wagers. They will be released Aug. 10.
Public commentary can be submitted through Sept. 9.
Principal definition still vague
The late addition of requiring $50,000 per principal for background checks doesn’t appear to have changed like bill sponsors Del. Mark Sickles and Sen. Jeremy McPike suggested.
Principal is defined as anyone that has a 5% interest in the company. It also includes any individual employed in a managerial capacity for a sports betting platform.
Operators were wary of adding additional fees to applications during the bill process. Both sponsors said the Lottery would work to narrow who falls under that definition through the regulatory process.
Virginia sports betting basics
There will be a minimum of four online sportsbooks and a maximum of 12 in the state. The total allowed will be based on what creates the best economic environment for Virginia determined by the Lottery.
Virginia also legalized casino gaming, which will bring five casinos into the state. Those casinos can apply for sports betting licenses but they won’t take away from the minimum of four online-only, untethered operators. If all five apply for a license, that leaves just seven total untethered licenses that could potentially be available.
Virginia has a middle-of-the-road tax rate of 15%. It’s effectively lower because adjusted gross revenue allows operators to subtract the 0.25% federal excise tax paid on handle.
The law bans betting on in-state college sports. It also requires official league data to settle in-play bets.