The fledgling sports betting industry in Virginia will grow to become one of the largest US markets, able to produce more than $5 billion in annual wagers, $400 million in annual operator revenue, and $60 million in annual state taxes by the third year of the business, PlayVirginia.com predicts.
Virginia joined 19 other states and Washington DC when online sportsbooks started taking bets in January, to launch some form of legal sports betting. And few have started out with a better future than the Old Dominion, which, according to PlayVirginia estimates, expects to manage more than $13 million, almost $1 billion in sales, and more than $125 million in state taxes within its first three years.
Analyst Eric Ramsey of PlayVirginia.com said: “Virginia is well-positioned, not only because it is a relatively large market, but because it will likely capitalise on Washington DC, a legal market that has left some bettors frustrated.
“In addition to Washington DC, 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 was introduced primarily as an online market, a relative rarity. And while regulators have allowed brick-and-mortar sportsbooks to be opened, once the industry matures, online betting could account for close to 90 percent of all bets. But retail sports betting, which was introduced as the first online-only market in the country, will be a key differentiator between it and neighboring Tennessee.
The tax structure of Virginia should not hinder the market’s growth. The regulatory system of the state includes a tax rate of 15 percent on sports betting income, which is higher than that of other states. For example, New Jersey taxes online sports betting at 13 percent .
But in Tennessee, which is off to the best start of any legal sports betting market in US history, it still falls below the 20 percent threshold, and well below Pennsylvania, the third largest market in the US, which also has the highest tax rate of 36 percent in the country.
Wide open state
Dustin Gouker of PlayVirginia.com commented: “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.
“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.”
Sports betting boom
Virginia is also the recipient of a US-wide sports betting boom, while also benefiting from the interest of nearly every major sportsbook operator in the country. FanDuel, the No. 1 operator in the country, opened the market, but it soon followed No. 2 DraftKings, as well as BetRivers, BetMGM, and William Hill.
Together, they reflect the industry’s best-known brands. Furthermore, the Washington Football Team, the first ever market access alliance between an online sportsbook operator and an NFL franchise, has already entered into an agreement with FanDuel.
“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.”