Virginia Senate Restores Sports-Betting Promotional Credits

February 6, 2023
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A proposal to allow mobile sports-betting operators to resume deductions of promotional wagers in Virginia has been approved by the state's Senate, while a companion measure in the House of Delegates was put aside for consideration until a future date.

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A proposal to allow mobile sports-betting operators to resume deductions of promotional wagers in Virginia has been approved by the state's Senate, while a companion measure in the House of Delegates was put aside for consideration until a future date.

“The bill before you adjusts a little bit what we did from the last budget year,” Senator Jeremy McPike, a Democrat, told his colleagues prior to the 31-7 passage of Senate Bill 1142 on Friday (February 3).

McPike said an amended version of his bill would allow new licensees for mobile sports betting to continue to deduct unlimited promotional credits in their first year of operation to “allow them to establish in the market and deduct those promotions; after that it reduces those deductions to 1.75 percent of total wagers.”

McPike said the 1.75 percent cap would also apply to “anyone who is actually in the market beyond that one-year mark.”

Both SB 1142 and House Bill 2202 were filed in response to Virginia’s biennial budget that went into effect last July and ended unlimited promotional deductions from taxable revenue for all operators that have been live for one year or longer.

McPike’s original bill had four different phases beyond unlimited deductions in the first year. The second year would have allowed deductions equal to 2.5 percent of monthly handle until June 2024, before declining by 0.25 percentage points each year until levelling out at 1.75 percent in July 2026.

On Friday, the House Appropriations Committee without debate voted 21-0 to approve a motion to table HB 2202, which had been introduced by Republican Delegate Roxann Robinson.

Other bills on the docket for Virginia's 2023 legislative session include a measure to allow residents of the city of Petersburg to vote on hosting a casino, and a controversial proposal to legalize and regulate so-called grey-market machines, which lawmakers have repeatedly been trying to eliminate.

Lawmakers are also considering creating a Problem Gambling Treatment and Support Advisory Committee, as well as a Gaming Regulatory Fund to offset costs of enforcing gaming regulations.

Further measures have been filed to require a formal study into whether all forms of gambling should be subject to oversight by a single regulatory authority.

The measure to amend state law dictating which cities in Virginia are eligible to host casinos was narrowly defeated by a Senate committee last week, although a similar measure in the House of Delegates continues to make its way through the legislative process.

The Senate Finance and Appropriations Committee voted 7-8 late Thursday (February 2) to kill Senate Bill 780, authored by Senator Joe Morrissey, a Democrat, to allow Petersburg to vote on The Cordish Companies’ $1.4bn casino proposal for the city.

However, House Bill 1373 is still alive after the House General Laws subcommittee voted 5-2 to send it to the Committee on Appropriations.

Delegate Kim Taylor, a Republican, said her bill simply adds Petersburg to the list of cities eligible to host a casino under state law.

“The intent of the original legislation allowing for casinos in Virginia was supposed to help economically disadvantaged areas. Petersburg is one of those areas,” said Taylor, who testified before the subcommittee last Tuesday (January 31).

“Richmond voted no. The people voted no to a casino,” Taylor added. “Petersburg has suffered from significant economic decline over the last 40 years. Allowing Petersburg to vote will transform the city. Petersburg deserves a chance to vote; Richmond already said no.”

Most opponents of HB 1373 are Richmond city officials. Richmond voters narrowly defeated a referendum in November 2021 that would have allowed a partnership between Churchill Downs-owned Peninsula Pacific and Urban One to build a $565m casino-resort.

Leonard Sledge, director of Richmond’s economic development department, said defeat of the measure would have affirmed Richmond’s right to have a second referendum on the casino.

When Virginia legalized casinos in November 2020, it limited them to one facility each in Bristol, Danville, Norfolk, Portsmouth and Richmond.

Delegate Schuyler VanValkenburg, a Democrat, offered a substitute version that would have struck one of the five cities from the original law.

“The right move now is to do nothing and see how it all shakes out,” said VanValkenburg, whose amendment was voted down by a voice vote of the subcommittee.

The House Appropriations Committee on Friday approved the eligible host city bill by a narrow 12-9 vote, sending it to the full House of Delegates for their consideration.

Delegate Mark Sickles, a Democrat and influential figure on gambling matters, expressed his support for the measure, saying that prior to Friday’s vote he did not think it was time to end debate on the proposal. He said he was optimistic that some compromise could be reached between the parties.

The House bill would allow Petersburg the opportunity to host a public referendum on The Cordish Companies’ proposal in November before nearby Richmond could hold a second vote on its own casino project.

Meanwhile, a legislative proposal reauthorizing so-called skill games, or grey-market gaming machines, will go nowhere this session, according to its sponsor.

House Bill 2295, which would regulate and tax so-called skill games through at least July 2024, is dead for this session after not being taken up by the General Laws Subcommittee last week.

Republican House Majority Leader Terry Kilgore told the Associated Press he does not expect the bill to advance this session as long as the legality of previous legislation prohibiting the machines is pending before a state judge.

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