Virginia Regulates Sports Betting Under New Gambling Laws

Virginia has undergone a significant transformation in its approach to gambling, evolving from a state with historically restrictive policies to a burgeoning market for legal sports betting. This shift, driven by legislative changes and a desire to capture new revenue streams, has opened up a regulated environment for both operators and consumers. For residents and visitors in the Commonwealth, understanding the new landscape of gambling laws is essential for participating in these activities legally and responsibly. The state’s framework, overseen by the Virginia Lottery, aims to provide a safe and competitive market while establishing clear rules for all involved parties.

History of Gambling in Virginia

Virginia’s history with gambling is long and complex, reflecting a traditionally conservative stance that has slowly given way to modernization. For much of its history, the Commonwealth prohibited most forms of gambling. The most significant early exception was pari-mutuel wagering on horse racing, a practice with deep cultural roots in the state. The establishment of the Virginia Lottery in 1987 marked a major turning point. Approved by voters, the lottery was created to generate revenue for public education, and it quickly became a widely accepted form of state-sanctioned gambling.

For decades following the lottery’s introduction, the expansion of gambling was slow. Efforts to introduce casino gaming were consistently defeated in the General Assembly. The landscape began to shift more rapidly in the late 2010s. The rise of Historical Horse Racing (HHR) machines, which resemble slot machines but are based on the outcomes of past horse races, provided a new source of revenue for the state’s racing industry. The pivotal moment came in 2018 when the U.S. Supreme Court struck down the Professional and Amateur Sports Protection Act (PASPA), giving individual states the authority to legalize sports betting.

This federal decision prompted Virginia’s lawmakers to act. In 2020, the General Assembly passed comprehensive legislation, House Bill 896 and Senate Bill 384, to authorize online sports betting and pave the way for the construction of up to five land-based casinos in designated cities. This landmark legislation officially brought Virginia into the modern era of regulated gambling, with the first online sportsbooks launching in January 2021. The state’s approach was designed to be competitive, allowing for a relatively high number of online operators to enter the market under the regulatory oversight of the Virginia Lottery.

Current Gambling Laws in Virginia

The current gambling laws in Virginia are primarily defined by the legislation passed in 2020. The framework legalizes and regulates several forms of gambling, with a strong emphasis on consumer protection and responsible gaming. The Virginia Lottery serves as the chief regulatory body for both sports betting and casino gaming, responsible for licensing operators, ensuring compliance with state laws, and managing tax revenue. The legal age for participating in all forms of regulated gambling in Virginia, including sports wagering, casino games, and the lottery, is 21.

What is the legal definition of gambling?

In Virginia, the legal definition of gambling is outlined in the Code of Virginia § 18.2-325. It defines illegal gambling as making, placing, or receiving any bet or wager of money or other thing of value, in exchange for a chance to win a prize, stake, or other consideration or thing of value, dependent upon the result of any game, contest, or any other event the outcome of which is uncertain or depends upon chance. The law makes an important distinction between games of chance and games of skill. However, the comprehensive legislation passed in 2020 explicitly carves out exceptions for authorized activities, including the state lottery, pari-mutuel wagering on horse racing, charitable gaming, casino gaming in eligible host cities, and state-regulated sports betting. Therefore, while the general definition of illegal gambling remains broad, these specific, licensed activities are considered legal under Virginia’s gambling laws.

Is advertising of gambling permitted in Virginia?

Yes, the advertising of legal and licensed gambling activities is permitted in Virginia, but it is subject to strict regulations set forth by the Virginia Lottery. The rules are designed to prevent deceptive marketing practices and to ensure that advertising does not target individuals under the legal gambling age of 21. Key requirements for sports betting advertisements include:

• Truthfulness: All advertising must be accurate and not misleading. Claims about potential winnings or promotions must be clear and transparent.
• Responsible Gaming Messaging: Advertisements must include messages promoting responsible gambling, such as a problem gambling helpline number (1-888-532-3500) and resources.
• Age Restrictions: Marketing materials must not be designed to appeal primarily to minors. Advertisements cannot be placed in media where the majority of the audience is reasonably expected to be under 21.
• Prohibition of Guarantees: Advertisements cannot imply that wagering is a path to financial success or that it can solve personal or financial problems.

The Virginia Lottery actively monitors operator advertisements to ensure compliance with these regulations, protecting consumers and promoting a healthy gaming environment.

Gambling Winning and Losses Taxes

Gambling winnings are considered taxable income under both federal and Virginia state law. Bettors are responsible for reporting all winnings to the Internal Revenue Service (IRS) and the Virginia Department of Taxation. For significant wins, operators are required to issue a federal Form W-2G, a copy of which is also sent to the IRS. Generally, a W-2G is triggered by wins of $600 or more if the payout is at least 300 times the wager amount.

Federally, gambling winnings are typically taxed at a flat rate of 24%, which may be withheld by the sportsbook or casino at the time of payout for large sums. On the state level, gambling winnings are subject to Virginia’s personal income tax, with rates ranging from 2% to 5.75%, depending on the individual’s total annual income. Bettors are expected to include their gambling income on their annual tax returns.

While winnings must be reported as income, gambling losses can sometimes be deducted. However, these deductions are only available to taxpayers who choose to itemize their deductions on their federal tax return. Furthermore, the amount of losses claimed cannot exceed the amount of winnings reported in the same tax year. It is advisable for individuals with significant winnings or losses to maintain detailed records of their sports betting activity and consult with a tax professional.

Key Milestones in Gambling Laws

Virginia’s journey toward its current gambling landscape is marked by several key legislative and regulatory milestones. These events collectively shaped the state’s modern approach to gaming and sports betting.

• 1987: Virginia voters approve a referendum to establish a state-operated lottery. The Virginia Lottery is created, with proceeds designated for public education.
• 1988: The first Virginia Lottery tickets go on sale, marking the beginning of legal, state-sanctioned gambling in the Commonwealth.
• 1992: The General Assembly legalizes pari-mutuel wagering on horse racing, leading to the opening of Colonial Downs racetrack in 1997.
• 2018: The U.S. Supreme Court overturns the Professional and Amateur Sports Protection Act (PASPA), empowering states to legalize and regulate sports betting.
• 2019: The Virginia General Assembly passes legislation to permit Historical Horse Racing (HHR) machines at Colonial Downs and satellite facilities, providing a crucial revenue boost to the horse racing industry.
• 2020: Landmark legislation (HB 896 and SB 384) is passed, legalizing online sports betting and authorizing the development of up to five land-based casinos in Bristol, Danville, Norfolk, Portsmouth, and Richmond (though Richmond voters later rejected their casino proposal). The Virginia Lottery is appointed as the regulator.
• January 2021: The first legal online sportsbook, FanDuel, launches in Virginia, officially kicking off the era of mobile sports betting in the state.
• 2022-2023: The first licensed casinos open their doors, with Hard Rock Hotel & Casino Bristol opening a temporary facility in July 2022 and Rivers Casino Portsmouth following in January 2023.

What Types of Gambling Are Legal?

Under current Virginia gambling laws, several types of gambling are legal and regulated for individuals aged 21 and older. These activities provide a range of options for consumers within a state-monitored framework.

1. Online Sports Betting: Mobile and online sports betting is the most accessible form of wagering in the state. A wide variety of licensed operators offer markets on professional and collegiate sports, though betting on in-state college teams is restricted.
2. Casino Gaming: Land-based casinos are now legal in specific cities that approved them via local referendums. These casinos offer traditional games like slot machines, blackjack, roulette, poker, and craps.
3. Virginia Lottery: The state lottery offers numerous draw games like Powerball and Mega Millions, as well as scratch-off tickets and online instant-win games available on its official website and app.
4. Horse Racing: Pari-mutuel wagering on live horse racing is legal at Colonial Downs. Additionally, betting on simulcast races from tracks across the country is available at the racetrack and at satellite wagering facilities known as Rosie’s Gaming Emporiums.
5. Historical Horse Racing (HHR): These electronic gaming machines, which are available at Rosie’s Gaming Emporiums and at Colonial Downs, allow players to bet on the outcomes of previously run, anonymous horse races.
6. Charitable Gaming: Certain qualified non-profit organizations are permitted to host fundraising events that include games like bingo, raffles, and duck races. This is regulated by the Virginia Department of Agriculture and Consumer Services.

Are any types of gambling products prohibited?

Despite the recent expansion, Virginia’s gambling laws still prohibit several types of gambling products and activities. The state maintains a regulated market, and any form of gambling that falls outside the legal framework is considered illegal. Prohibited activities include:

• Unlicensed Online Gambling: Using offshore or unregulated online casinos and sportsbooks is illegal in Virginia. These sites do not operate under the state’s consumer protection regulations, posing risks to players’ funds and data.
• Private Wagering: Unlicensed, private bookmaking operations are strictly forbidden.
• Certain Collegiate Sports Betting: While betting on college sports is legal, the law prohibits proposition bets on all college games. Additionally, wagering on the performance of Virginia-based college teams (e.g., University of Virginia, Virginia Tech) is not permitted.
• Unregulated Gaming Machines: Operating private, unlicensed slot machines or other electronic gaming devices is illegal.

Quick Facts About Gambling in Virginia

For those new to sports betting and gambling in the Commonwealth, here are some essential facts presented in a clear format.

Popular Sports to Bet on in Virginia

While Virginia does not have a major professional sports team within its borders, its proximity to Washington, D.C., and its passionate college sports culture create a vibrant sports betting market. Football is by far the most popular sport for wagering, with the NFL’s Washington Commanders commanding a large fanbase throughout the state. The Super Bowl is the single largest betting event of the year.

Basketball is also extremely popular, with significant betting activity on the NBA, particularly on the nearby Washington Wizards. March Madness, the NCAA men’s basketball tournament, generates immense interest, even with the prohibition on betting on Virginia-based teams. Baseball fans in Virginia often follow the Washington Nationals and the Baltimore Orioles, making MLB games a staple for summer wagering. Hockey’s popularity has grown thanks to the success of the Washington Capitals, and the NHL playoffs see a substantial increase in betting volume. Other popular sports include soccer (MLS and international leagues), golf, tennis, and motorsports, particularly NASCAR events held at Virginia’s own Richmond Raceway and Martinsville Speedway.

Top 10 sportbooks in Virginia

The Virginia market for sports betting is highly competitive, featuring many of the nation’s leading operators. Here is a look at ten prominent sportsbooks available to bettors in the Commonwealth.

1. FanDuel Sportsbook: Often a market leader, known for its user-friendly interface, same-game parlay options, and extensive promotional offers.
2. DraftKings Sportsbook: A major competitor with a comprehensive betting menu, deep statistical resources, and a popular rewards program.
3. BetMGM: The sports betting arm of MGM Resorts International, offering a sophisticated platform with a wide array of betting markets and loyalty rewards tied to MGM properties.
4. Caesars Sportsbook: Known for its large welcome bonuses and the acclaimed Caesars Rewards program, which integrates with its casino and hotel properties.
5. BetRivers: Offers a straightforward platform with a strong focus on live streaming for various sporting events and a simple-to-understand loyalty program.
6. PointsBet: Differentiates itself with its unique PointsBetting feature, a high-risk, high-reward wagering style, in addition to traditional fixed-odds betting.
7. Hard Rock Bet: Associated with the Hard Rock casino brand, this sportsbook provides a sleek app and a loyalty program that connects online betting with in-person casino rewards.
8. ESPN BET: A newer entrant backed by the major sports media brand, offering unique promotions, media integrations, and a platform operated by PENN Entertainment.
9. Betway: An established international brand with a strong presence in European markets, known for its extensive soccer markets and clean, intuitive platform.
10. Bally Bet: Features a simplified betting experience and social features that allow users to connect with friends and share wagers, appealing to casual and social bettors.

Conclusion

The legalization and regulation of sports betting have fundamentally altered Virginia’s gambling landscape. Under a structured framework governed by robust gambling laws and overseen by the Virginia Lottery, the Commonwealth has established a competitive and secure market for consumers. From its traditionally restrictive past, Virginia has embraced a modern approach that provides entertainment options while generating significant tax revenue. For participants, understanding the rules of this new environment, from tax obligations to the specifics of legal wagering and the importance of responsible gaming, is paramount. As the market continues to mature with the opening of more retail casinos and the potential for new online operators, Virginia is positioned as a key player in the legal U.S. gambling industry.

Sources

Virginia Council on Problem Gambling. (n.d.). Get Help. Retrieved from https://vcpg.net/get-help/

Virginia General Assembly. (n.d.). Code of Virginia § 18.2-325. Definitions. Virginia Law. Retrieved from https://law.lis.virginia.gov/vacode/title18.2/chapter8/section18.2-325/

Virginia General Assembly. (2020). HB 896 Casino gaming; regulation by Virginia Lottery Board, definitions, etc. LIS. Retrieved from https://lis.virginia.gov/cgi-bin/legp604.exe?201+sum+HB896

Virginia Lottery. (n.d.). Sports Betting in Virginia. Retrieved from https://www.valottery.com/playingmatters/sportsbetting

Virginia Lottery. (n.d.). Sports Bettors’ Bill of Rights. Retrieved from https://www.valottery.com/aboutus/casinogaming/sportsbettorsbillofrights