Virginia’s Nascent Casino Market Already Beating Expectations

Article by : Erik Gibbs Sep 27, 2023

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Virginia’s tax revenue from sports betting and casinos has far exceeded the predictions made four years ago when the state contemplated expanding legalized gambling.

The state’s casino industry, still in construction, has also outperformed initial expectations. Despite operating from temporary locations while more extensive facilities are being built, these casinos have demonstrated strong financial performance.

The temporary Hard Rock Casino in Bristol, which opened in July 2022, reported $157 million in net gambling revenue during its first year, surpassing the initial projection of $130 million for a fully established casino.

This generated nearly $26 million in tax revenue, distributed to local governments and a state fund for school construction and upgrades.

Similarly, Rivers Casino Portsmouth, which began operations in January and was initially projected to generate $167 million in annual gambling revenue, had already accumulated $120 million in net revenue by the end of June, aligning with the state’s fiscal year conclusion.

The recently opened temporary Caesars casino in Danville reported $31 million in gambling revenue for May and June alone. This figure sharply contrasts with the 2019 state study, which had projected an annual gambling revenue of $190 million for a Danville-based casino.

Furthermore, another casino project is underway in Norfolk, and Richmond is preparing for a new vote on a casino proposal this fall. The previous ballot referendum in 2021 did not secure approval.

As Virginia’s gambling landscape expands, policymakers have introduced regulations to allocate a portion of the revenue to assist individuals grappling with gambling-related issues.

In fiscal year 2023, approximately $2.6 million was earmarked for resources addressing problem gambling, with a substantial portion directed towards local community service boards already involved in tackling addiction and mental health challenges.

During a recent meeting, Nelson Smith, Commissioner of the Virginia Department of Behavioral Health and Developmental Services, estimated that around 2% of Virginia’s population could be impacted by problem gambling.

Tax revenue from sports betting has also skyrocketed from $27 million in the previous year to $67 million in fiscal year 2023, surpassing the anticipated $55 million in annual tax revenue from sports betting made by a state gambling study.

This remarkable revenue growth can be primarily attributed to a recent tax policy adjustment preventing established sports betting companies like FanDuel and DraftKings from deducting promotional expenses from their state tax obligations.

Virginia’s sports betting volume also grew from approximately $4.2 billion in fiscal year 2022 to $5.1 billion in fiscal year 2023.
In 2020, Virginia legislators endorsed the legalization of sports betting, and digital sports betting platforms launched in early 2021.