Virginia’s fledgling sports betting industry will grow into one of the largest markets in the country, capable of generating more than $5 billion in annual wagers, $400 million in annual operator revenue and $60 million in annual state taxes by the market’s third year, according to estimates by PlayVirginia, which analyzes and researches the state’s regulated online gaming and sports betting market.
When online sportsbooks began taking bets in January, Virginia joined 19 other states and Washington, D.C., to launch some form of legal sports betting. And few launched with a brighter future than the Old Dominion, which projects to more than $13 million in handle, nearly $1 billion in revenue, and more than $125 million in state taxes over its first three years, according to PlayVirginia projections.
“Virginia is well-positioned, not only because it is a relatively large market, but because it will likely capitalize on Washington D.C., a legal market that has left some bettors frustrated,” said Eric Ramsey, analyst for PlayVirginia. “In addition to Washington D.C., Virginia may also draw from Baltimore — at least until Maryland launches sports betting, as well as North Carolina. Having so many large markets so close by has been a boon for states like New Jersey, the nation’s largest sports betting market, and Indiana.”
Virginia launched as a solely online market, which is a relative rarity. And though regulators have allowed for the launch of brick-and-mortar sportsbooks, online betting should account for close to 90 percent of all bets once the market matures. But retail sports betting will be a key differentiator between it and neighboring Tennessee, which launched as the nation’s first online-only market.
Virginia’s tax structure should not impede the growth of the market. The state’s regulatory framework calls for a 15 percent tax rate on sports betting revenue, which is a higher rate than most states. New Jersey, for instance, taxes online sports betting at 13 percent. But it still falls below the 20% rate in Tennessee, which is off to the best start of any legal sports betting market in U.S. history, and well below Pennsylvania, the third-largest market in the U.S. which also boasts the nation's highest tax rate at 36 percent.
“Virginia has undergone one of the greatest transformations in history by going from a state with few gambling options to a wide-open state that will allow for online betting and retail casinos,” said Dustin Gouker, analyst at PlayVirginia. “Obviously, Virginia has had the benefit of seeing what has worked in other states. And that has resulted in a regulatory framework that should foster its long-term success.”
Virginia is also the beneficiary of a sports-betting boom across the U.S., with its launch contributing to the busiest weekend in regulated U.S. gambling history. It has also benefited from interest from almost every major sportsbooks operator in the country.
FanDuel, the nation’s No. 1 operator, opened the market, but No. 2 DraftKings, as well as BetRivers, BetMGM, and William Hill, have soon followed. Together they represent the best-known brands in the industry. In addition, FanDuel has already inked a deal with the Washington Football Team, the first-ever market access partnership between an online sportsbook operator and an NFL franchise.
“Virginia’s market is still untested, but it seems to be off to a great start,” Ramsey said. “We’ve seen states like Colorado, which was largely untested, too, flourish in large part because the openness of a new jurisdiction without dominant players is so appealing for operators. Ultimately a robust and competitive market benefits consumers while making the industry a reliable revenue producer for the state for years to come.”