Sports betting has proven enormously popular in Virginia since its launch in late January, and the state passed a milestone recently with $1 billion wagered, the fastest state to reach that mark.
There are now 10 companies licensed to take bets within the commonwealth, and industry experts project that when the market is fully grown, Virginia will take about $5 billion in sports wagers each year.
Sports betting is overseen by the Virginia Lottery, and is already the most popular product the Lottery offers. Last year, the lottery took in $2.15 billion in revenue, and wagering at sports books is on pace to surpass that in 2021, even though most companies didn’t come online in time for the lucrative NFL playoffs and Super Bowl.
That doesn’t mean sports betting will be the lottery’s most profitable product, though. The Lottery returns about 61% of each bet as prize money, but that number is closer to 95% for sports bets.
The Virginia Lottery releases finalized numbers at the end of each month for the previous month, but the state likely crossed the $1 billion mark at the end of May or the beginning of June.
So far that hasn’t translated to a tax windfall, as the law governing sports betting allows companies to write off some of their promotional expenses as they attempt to gain new customers.
The launch of sports betting has brought a wave of advertising by many of the companies involved.
According to an April presentation from the lottery, the top three companies so far in Virginia by market share are FanDuel, DraftKings and BetMGM.
Of those three, only BetMGM paid state taxes in the first two months of legal gambling – the other two companies were able to write their tax bill down to zero because of their aggressive promotional efforts.
That changed in March, and as the market matures, JLARC has projected annual tax revenues of $55 million from sports betting, combining both online services and in brick-and-mortar casinos once those open their doors.
The Lottery also indicated that it would consider awarding as many as five additional sports betting licenses during the next licensing period – applications for that process were due at the end of May.
The companies currently licensed are: FanDuel, DraftKings, BetMGM, BetRivers, Caesars/William Hill, Wynn, Golden Nugget, Bally’s, Penn Sports/Barstool and Unibet.