Virginia Study Recommends Lottery as State’s Sole Gaming Regulator

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Several new forms of gambling have appeared in the Commonwealth of Virginia over the past five years. Construction is underway for the state’s first retail casinos. It also newly allows sports wagering, charitable poker, horse racing, and skill games.

The question, amid such rapid expansion, is how best to regulate the new products.

Many states have recognized gaming’s ability to raise state and local revenues. Virginia is following along closely with its neighbors in adding to the available options.

Maryland legalized casinos in 2008 and sports betting just this year. In 2019, West Virginia joined the ranks of online casino states, and Tennessee created its now-booming sports betting market. After studying the potential revenue and economic impacts of casinos and sports wagering, the Virginia General Assembly legalized those forms of gaming in 2020. It also created an online lottery the same year.

As it stands, three different state agencies regulate gambling in Virginia. The Virginia Lottery, in addition to its historical duties and the new iLottery, now oversees the casino and sports verticals. However, the Virginia Department of Agriculture and Consumer Services (VDACS) regulates all charitable gaming, while the Virginia Racing Commission (VRC) is responsible for betting on horse races.

Consolidation of Regulation

A new study released this month by Virginia’s Joint Legislative Audit and Review Commission (JLARC) recommends dispensing with that complexity. It says that the Virginia Lottery should be designated the state’s central gaming regulation agency.

In making its recommendation, JLARC highlighted that the VDAC and VRC suffer from a shortage of resources. The report states:

Both agencies need more staff and better technology to ensure that all gaming under their purview operates with integrity.

JLARC recommends adding two new Virginia Lottery Board positions to handle the additional responsibilities. One of these, it says, should be filled by someone with a charitable gaming background and the other, someone with a horse racing background.

Regulatory Practices Elsewhere

Most states, like Virginia, have tended to develop their regulatory frameworks on an ad hoc basis.

West Virginia’s approach resembles what JLARC suggests for Virginia’s future. Voters approved the creation of the WV Lottery in 1984 by a 67% majority. The legislature passed the Lottery Act the following year.

As WV gambling expanded, the WV Lottery’s duties did as well. Today, it regulates sports wagering, online casinos, video lottery, and table games at the state’s four racetrack casinos and the Greenbrier Resort.

Large states with a long gambling history are more likely to have a separate gaming regulator. Such is the case with the three largest online casino states: New Jersey, Pennsylvania and Michigan.

New Jersey is arguably the most gambling-friendly state aside from Nevada. It will celebrate the 45th anniversary of legalized gambling in the state in December.

The NJ Casino Control Commission is the independent licensing authority of New Jersey’s casinos and its key employees. A sister division, the NJ Division of Gaming Enforcement, is the law enforcement agency reviewing and auditing casino-hotel and racetrack operations. It also investigates and prosecutes all casino-related crimes and tests the integrity of gaming products.

The Pennsylvania and Michigan Gaming Control Boards have similar powers and responsibilities. JLARC’s report recommends against following the New Jersey model in Virginia, however.

Does Virginia’s Gambling Future Include Online Casinos?

Of course, having a suitable regulatory framework in place is essential for any future gaming expansion. One might wonder whether online casinos could be on the cards.

Geographically and politically, Virginia seems like a good candidate for online casinos. However, it’s hard to see a state legalizing online casinos without getting their retail counterparts up and running first.

Virginia opened its first temporary casino in July. Bristol Casino, as it’s called, sits on the site of what will become Hard Rock Hotel & Casino, which won’t open until May 2024. However, even the temporary facility has already paid over $7 million in taxes to the state. Three other brick-and-mortar establishments are also on the way, but such projects take time.

That said, Virginia is eager to expand gaming throughout the state. The JLARC study recommends the Virginia Lottery keep tabs on new gaming opportunities:

Create a state policy office within the Virginia Lottery to monitor, study, and advise state officials about new and emerging forms of gaming.

In 2021 alone, Virginians wagered $9.4 billion on legal gaming, according to the JLARC study. All told, Virginia seems like a long shot for online casinos in the next three to five years. Beyond that, however, its prospects start to look a lot better. The more organized the regulatory picture becomes, the easier that eventual effort will be.

About the Author

Keith Stein

Keith Stein is a Virginia-based freelance journalist for Bonus.com. He has a combined 27 years of experience in freelance writing, full-time journalism and supporting monthly and weekly news publications. He has also worked as a contributing writer with United Press International.

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