Virginia has reaped a windfall of tax revenue from sports betting and casinos that far exceeds initial predictions made four years ago when the state was mulling over the idea of expanding its gambling industry.
Tax Revenue from Sports Betting in Virginia Surges to $67M in FY 2023
According to the latest figures presented by the Virginia Lottery on September 19, tax revenue from sports betting in fiscal year 2023 skyrocketed to $67 million, a significant leap from the $27 million reported the previous year. Remarkably, a state study conducted four years ago projected annual tax revenue from sports betting to reach a maximum of $55 million once the industry matured.
This unexpected surge in revenue can be largely attributed to a recent change in tax policy that disallowed established sports betting giants like FanDuel and DraftKings from deducting expenses related to free bet promotions and other wagering bonuses from their state tax obligations.
Nevertheless, it is essential to note that the total amount wagered by Virginians on sports betting also saw substantial growth, rising from approximately $4.2 billion in fiscal year 2022 to a staggering $5.1 billion in fiscal year 2023.
The journey to this remarkable revenue increase began in 2020 when Virginia lawmakers voted to legalize sports betting. Digital sports betting platforms made their debut in the state in early 2021, setting the stage for the industry’s rapid growth over the following years.
Virginia’s Casinos Also Shatter Projections, Netting Millions in Tax Revenue
In addition to sports betting, Virginia’s casino sector, still under construction, has outperformed expectations during its initial stages of development. Notably, the temporary Hard Rock Casino in Bristol, which opened in July 2022, generated $157 million in net gambling revenue during its first year, surpassing the $130 million projection from the state study. This translated into nearly $26 million in tax revenue, benefiting both local governments and a state fund dedicated to school construction and upgrades.
Similarly, Rivers Casino Portsmouth, operating since January, had already reported $120 million in net revenue by June, exceeding the projected $167 million in annual gambling revenue. This contributed approximately $17.9 million in tax revenue to the state.
The temporary Caesars casino in Danville also exceeded expectations, recording $31 million in gambling revenue in just May and June alone, compared to the projected annual revenue of $190 million from the 2019 state study.
With plans for another casino in Norfolk and a pending referendum for a casino project in Richmond, Virginia’s gambling industry continues to expand rapidly, leading to concerns about the potential for increased gambling addiction. Senator Tommy Norment, R-James City, expressed his apprehensions about the associated costs of addressing such issues.
As the state’s gambling landscape evolves, policymakers have implemented measures to allocate a portion of the revenue toward helping those affected by gambling problems. In fiscal year 2023, nearly $2.6 million was earmarked for problem gambling resources, primarily directed to local community service boards already involved in addressing addiction and mental health issues.
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