Virginia’s wagering operators experienced a 24.6% year-over-year revenue surge in May, despite a slight dip in both handle and revenue when compared to April. However, this monthly decline aligns with the broader trends observed across the U.S. sports calendar. April’s figures were significantly buoyed by the high-profile men’s and women’s NCAA basketball semifinals and finals, with this year’s women’s basketball tournament achieving unprecedented betting handle.
May, in contrast, saw the commencement of the NBA and NHL postseasons and the ongoing regular season in Major League Baseball, settings that typically attract fewer bets compared to the thrilling climax of the college basketball season. Despite these fluctuations, Virginia wagering operators maintained an impressive 11.9% win rate. This double-digit hold rate in May marks the 21st instance of such performance since sports betting platforms became operational in the state in January 2021.
The state’s regulatory adjustments last June have also played a critical role in shaping the financial landscape of sports betting. Initially, operators were able to deduct promotional play expenses from their taxable revenue, thus reducing their tax liability. However, as of June 2022, these write-offs have been restricted to the first 12 months of a platform’s operation. Currently, only two operators, Betr (which launched on September 6, 2023) and Fanatics (which debuted on November 21, 2023), are eligible for these deductions.
In May, Virginia managed to tax $53.6 million of the total adjusted gross revenue (AGR), despite wagering operators writing off just over $6 million in promotions and other deductions. The state netted $8.1 million in tax revenue, including a designated $202,184 allocated towards problem and responsible gaming funding. By law, 2.5% of the tax revenue is earmarked specifically for initiatives designed to address and mitigate problem gambling.
It is important to note that the Virginia Lottery does not provide a breakdown of sports betting reports based on individual operators or specific sports. Nevertheless, the data indicates that out of the 14 live operators in the state, 11 recorded a net positive AGR in May.
Virginia, the ninth-largest state in the U.
.S. population-wise, has embraced online sports betting with considerable zeal. For comparison, nearby New Jersey, which is a closely-sized and more mature market, reported a wagering handle of $801.5 million in May, and its operators achieved a gross gaming revenue of $78.8 million.
The steady performance of Virginia’s sports betting industry underscores the state’s robust market dynamics and the effective adaptation to seasonal fluctuations inherent in the sports calendar. With a growing number of live operators and the ensuing competition, Virginia’s betting landscape is set to evolve further, potentially yielding even higher revenues and tax contributions in the future.
While much of the attention in April was focused on the NCAA basketball tournaments, the transition to May’s sports calendar did not entirely dampen enthusiasm. The beginning of the NBA and NHL playoffs provided new opportunities for wagers, even if they did not match the peak excitement levels of the previous month. Regular-season baseball continued to draw its steady base of bettors, contributing to the overall handle.
The strategic regulatory shift to limit promotional write-offs has also ensured a more level playing field and increased the taxable revenue base. This adjustment reflects a broader trend in the U.S. sports betting regulatory landscape aimed at balancing operator incentives with state financial interests. The two platforms still benefiting from promotional deductibility, Betr and Fanatics, are now operating within a more competitive environment where the direct impact of promotions on the bottom line is more scrutinized.
Moreover, the substantial tax revenue generated in May, particularly the funds earmarked for problem gambling initiatives, highlights the state’s commitment to fostering a responsible betting environment. This financial support is crucial for developing comprehensive programs designed to identify and assist individuals impacted by gambling addiction.
In summary, Virginia’s sports betting operators have demonstrated resilience and adaptability amid the changing seasons of the sports calendar. The double-digit hold rate continues to be a hallmark of the state’s betting market, reflecting solid operational strategies and consumer engagement. As Virginia’s market matures, comparing its performance with established markets like New Jersey provides valuable insights into potential growth trajectories and regulatory impacts.
Looking ahead, the anticipation for upcoming major sports events and the continual adaptation to regulatory changes will likely keep Virginia’s betting market on an upward trajectory. With increasing tax revenues and dedicated funds for responsible gaming, the state can ensure the sustainable growth of this burgeoning industry while safeguarding public welfare.
