Alerts and Updates

Governor Returns Virginia Gambling Legislation with Amendments, Including Tax for COVID-19 Fund

April 17, 2020

If the legislature accepts the recommendations, the legislation becomes law.

Update: On April 22, 2020, both chambers of the Virginia General Assembly approved Governor Northam’s amendments to the casino and sports betting bills, thus effectively making both bills Virginia law.

In a  March 17 Alert, we reported that Virginia’s General Assembly had sent Governor Ralph Northam two bills (Senate Bill 36 and House Bill 896), which, if signed, would permit five land-based casinos, online sports betting and up to 2,000 additional historical horse racing machines in the commonwealth. On the April 11 deadline to take action on the bills, Governor Northam returned them, each unsigned, to the Virginia legislature with amendments. While the governor’s proposed changes to the two bills appear minor (for example, they did not change tax rates, minimum capital expenditure requirements or the types of games), a new proposal would further expand gaming in Virginia, at least temporarily, by permitting and taxing skill-based machines in bars, convenience stores and truck stops to raise money for a COVID-19 relief fund.

The legislature can either adopt the recommendations with no changes or reject the amendments and send the original bills back to Governor Northam to sign or veto. If the legislature accepts the recommendations, the legislation becomes law.

The legislature is scheduled to reconvene on April 22 and will presumably discuss the proposed changes at that time. If the legislation becomes law, the five cities eligible for casinos―Bristol, Danville, Norfolk, Portsmouth and Richmond―may hold referendums in the November 2020 election to decide whether to allow a casino to break ground in the respective Virginia communities.

Governor Northam’s proposed changes to the sports-betting bill include:

  • Changing the application fee from a flat fee of $250,000 to $50,000 for each named principal of the applicant
  • Proposing a licensing fee of $250,000 for each of the sports-betting licenses selected to offer online sports betting
  • Allowing wagers on NCAA events that include Virginia teams
  • Extending the Virginia Lottery Board’s time to make a decision on sports-betting applications from 60 days to 90 days
  • Allowing licensees to operate online sports betting under a different brand name than their company name, and allowing a third-party to brand it (i.e., a skin)

Governor Northam’s proposed changes to the casino bill include:

  • Designating all state funds derived from the casino tax revenues to go to future school construction projects
  • Broadening the scope of the voluntary self-exclusion program to include additional gaming activities such as lottery games, sports betting and horse racing

Additionally, Governor Northam proposed delaying until July 1, 2021, the effective date of Senate Bill 971, which classifies as illegal gambling games of skill machines found in bars, convenience stores and truck stops throughout the commonwealth. In connection with delaying the bill, Governor Northam proposes placing a tax of $1,200 per month on each machine and requiring each machine distributor to submit a list of all operational skill game machines by July 1, 2020. Eighty-four percent of the tax revenue would go to a new COVID-19 relief fund, with 12 percent of that tax going to the host locality and 2 percent going to other expenses and problem gambling programs. The governor estimates the commonwealth would receive an estimated $150 million per year from this tax.

For Further Information

If you have any questions about this Alert, please contact Frank A. DiGiacomo, Robert L. Ruben, William M. Gantz, Adam BergerJoseph Caputi, any of the attorneys in our Gaming Industry Group or the attorney in the firm with whom you are regularly in contact.

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.