Virginia to become the seventh state with a legal online lottery

Virginia Online Lottery Bill Signed Into Law; Sports Betting and Casinos To Follow

Last week, Virginia became the seventh state to bring its lottery into the modern era.

Thanks to the signature of Gov. Ralph Northam, the Virginia Lottery will soon be able to sell single tickets online. Legal Virginia sports betting and land-based casinos are coming too, assuming the governor also puts his pen to those bills.

The lottery bill in question, S 922, passed the House and Senate on Feb. 20. It then sat on Northam’s desk for nearly three weeks before he signed it on Wednesday, along with 31 other pieces of legislation as the session drew toward its close.

VA online lottery provisions were also included in a pair of broader gambling bills over which lawmakers were deadlocked until the last minute. The signature of S 922 guaranteed that the Commonwealth would at least go forward with iLottery if lawmakers failed to reach a compromise on sports betting.

Virginia online lottery basics

The Virginia online lottery bill is lightweight, only changing two bits of existing law:

  • Repeals a paragraph of the Virginia Code, which prohibits the sale of lottery tickets online.
  • Amends the powers of the Lottery Board to include discretion over online sales.

Unlike bills legalizing various forms of gambling for the private sector, this leaves virtually everything to the discretion of the lottery. And based on what we’ve seen in other states, the Virginia Lottery will presumably take a broad view of what constitutes a “ticket.”

Instant games offered by other US internet lotteries sometimes bear a closer resemblance to video slots than physical scratch tickets. In addition to sounds and animation, they often feature variable stakes, an auto-play option, and sometimes even bonus games triggered by uncovering certain symbols.

These games are provided by the same business-to-business companies — like SBTech and Scientific Games — which provide online slot titles to the private sector.

In the absence of casinos, alternatives fill demand

Internet lotteries are big business for states that allow them, namely:

Though sales over the internet don’t rival physical ticket sales in these states yet, they’ve been growing exponentially. Considering there’s little alternative in Virginia, the potential for growth is magnified.

Kentucky and Georgia are the only two online lottery states without any land-based casinos. The former has a large and popular horse racing industry, however. The latter has the Emerald Princess casino cruise, which takes passengers out into international waters to gamble legally.

Virginia does have horse racing, though the industry is smaller and on far more tenuous footing than Kentucky’s. Its major racetrack, Colonial Downs, was built in 1997 but shut down in 2015. It reopened last year, however, thanks in part to the state legalizing historical horse racing (HHR) in 2018.

HHR machines are another alternative to casino slots, popular in some states that lack conventional casinos. There are now six establishments offering such machines in the Commonwealth.

Sports betting, casinos come down to the wire

The legislative session was supposed to end on Saturday. Late in the day, however, no agreement had been reached on either casino authorization or sports betting. In both cases, the House and Senate were in favor of the legislation. Each chamber had its own version of both bills and strongly rejected the revisions submitted by the other.

The bills remained alive past the deadline because the two branches also failed to agree on a budget. As a result, they extended the session to include an extra day of negotiations on Sunday.

During that time, the legislature managed to come to terms with both sports betting and casino construction. Lawmakers will reconvene on Thursday to finalize the budget.

Illinois, you may recall, took a similar road of passage at the end of its session last year.

Compromise sends everyone home

In the end, the Senate got its preferred 15% tax rate on sports betting. The House bill had specified a 20% rate.

The Senate compromised on college betting in return, keeping the section of the House bill that prohibits betting on in-state teams as well as in-play betting on all college sports. The final bill also retained a controversial official league data mandate for in-play betting.

The final tax rate in the casino bill split the difference between the two proposals, settling on a sliding scale between 18% and 30%. The range specified in the original House and Senate bills was 15% to 28% and 27% to 40%, respectively.

Neither bill is officially law yet, as they both wait for the final signature. There’s no reason to expect Northam won’t provide it, though, as he’s been in favor of sports betting from the start.

While he’s remained mum on casinos, it would be surprising to see the governor sign two pieces of gambling legislation and veto a third.

Casinos may ultimately conflict with iLottery

Online sports betting is a good start for Virginia online gambling in general. The eventual construction of land-based casinos is equally good for the long-term prospects for VA online casinos.

Most states that have legalized online casinos and poker mandate that it be conducted by (or in partnership with) land-based casinos. Although it’s theoretically possible to have online-only casinos, no state has chosen to go that route. Brick-and-mortar casinos are essentially a prerequisite for a full spread of online gambling options.

The only problem is that casino slots would compete with the alternatives currently available — namely the HHR machines and, soon, the iLottery.

Casinos in other online lottery states have taken exception to products that too closely resemble slot machines. In Pennsylvania, for instance, it resulted in a coalition of casinos suing the state lottery to attempt to stop it from offering such games.

That potential pitfall is still a ways off in Virginia, however. Approval and construction of the casinos will take years. Besides, the situation for online gambling in the US is changing so rapidly that it’s hard to know what things will look like by the time they open for business.

In the meantime, there’s plenty of cause for Virginians to celebrate. Sports betting and interactive lottery games are among the most modern forms of gambling a state can offer.

- Alex is a journalist from Dartmouth, Nova Scotia, Canada. Now site runner for Online Poker Report, he has been writing about poker and the online gambling industry in various capacities since 2014.
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