Sports betting in Virginia is paying out more than ever before, at least where the public purse is concerned. With new figures for October recently released, it has been calculated that the state raised a record $7 million plus in the tenth month of 2022 – a greater revenue than the state has ever achieved. That’s good news for public services in Virginia, but why the sudden jump?
The rise in taxed revenue can be attributed to a single law change that took place in 2022. The circumstances in which sportsbooks can deduct revenue from betting promotions have been narrowed, meaning that only five of the state’s betting platforms could deduct such revenue from their taxable income. Previously that number had been nine, which reduced the amount of tax collected on betting revenue by the state.
As a comparison, the amount of money deducted in promotional income in October 2022 was approximately $1 million. For the same month in 2021, that amount was $15.8 million; had that revenue been taxable, it would have amounted to approximately $2.4 million in additional revenue for the state of Virginia in that month alone. Stretched across a year – albeit unevenly – that extra taxable income could have represented a significant boost to the public finances for a state like Virginia.
We can’t be absolutely clear that Virginia will have seen that much more raised in taxes this year, as sportsbooks – motivated in part, perhaps, by the closure of the loophole – moved to a more profit-driven model in 2022 which saw fewer promotions offered overall. Nonetheless, it is a handy piece of information for anyone who was concerned that betting revenue would crater in states post-launch. Most sportsbooks launch with a great deal of “shock and awe” when it comes to betting promotions, and the question of whether customers will stay with sportsbooks after they drop the promotions is one that is asked often.
This news has come at an opportune time for Virginia, which is now facing competition at a level that it has not experienced before. The state has previously benefited from the betting business of sports fans in Maryland and Washington DC, who have traveled into Virginia to make bets due to an absence of choice in their home locations. Maryland launched its own sports betting platforms at the back end of 2022, potentially depriving Virginia sportsbooks of a portion of revenue going forward. If the in-state customer base continues to bet at its current rates, however, the loss of revenue may be barely noticeable at state level.
Year on year by comparison with 2021, Virginian sports betting platforms are believed to have experienced a 29% rise in income. Although this is likely to be diminished by more competition from out of state in 2023, it is at least fair to say that the state is seeing a sustained takeup of betting since its launch in early 2021.