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New Virginia Bill Paves Way for Regulated Online Poker

Posted on by John Lathram

VirginiaThe new bill, signed into law last week by Governor Ralph Northam, creates an extremely convoluted path towards regulated online poker in Virginia.

Late last week, Governor Ralph Northam signed bill SB 1126 into law. The bill outlines the processes for the authorization of casino gambling by the Virginia Lottery Board. If all the processes are completed and the conditions met – and there´s not a change of heart by the Virginia legislature – casino operators would be allowed to offer regulated online gambling including online poker.

The path towards regulated online poker in Virginia is extremely convoluted and – notwithstanding any Wire Act enforcement action by the DOJ – the earliest residents of the Old Dominion State are likely to see any regulated action on the virtual felt is 2022. Nonetheless, as far as “movement in the right direction” is concerned, 2022 is better than never at all.

What the Bill Actually Brings to the Table

The bill requires the Joint Legislative Audit and Review Commission to conduct a review of casino gaming laws in other states and report its findings to two legislative committees by December. If the report is favorable, the committees will recommend the Virginia Lottery Board creates the rules under which tribal and commercial casinos can operate.

Once the rules have been created, they will be presented to the legislature, which has to re-enact SB 1126 before the end of the 2020 legislative session. Thereafter, potential casino operators will be allowed to apply for licenses – subject to positive referendums in the locations where the casinos are proposed. Only once the casinos are built, will they be allowed to offer online gambling – if at all.

What Could Possibly Go Wrong?

Although it´s unlikely the Review Commission will produce an unfavorable report (based on the positive experiences of other states with casino gambling), if either of the two legislative committees – the Senate Committee on General Laws and Technology and the House Committee on General Laws – oppose any further movement towards regulated gambling, the bill will be stopped in its tracks.

Based on the report and the views of the two legislative committees (and possible Wire Act enforcement action by the DOJ), the Virginia Lottery Board may decide to focus solely on creating rules for on-premises gambling and abandon online gambling – which would end the prospects for online poker, unless it was given special treatment or a carve-out.

Once the rules have been created, they head to the General Assembly – which may have a very different look to it next year due to the state elections in November. There´s no guarantee the new legislature will re-enact SB 1126, or a re-enactment will be approved by a new Governor if Ralph Northam fails to hang onto his office in the elections.

Then there´s the question of who will apply for licenses. SB 1126 stipulates casinos have to be built in locations with more than 200,000 residents that have a high poverty rate and high unemployment rate, and in which a minimum percentage of residents are exempt from property taxes. Only five locations in the state of Virginia fulfill the criteria.

Before a potential casino operator can apply for a license, their presence has to be approved by a city-wide referendum. The referendums are unlikely to be held before November 2020; and, if operators get a favorable result and are accepted for a license, only then will they be able to build a casino – which is going to take years to complete.

Then (did I say the process was convoluted?), the operator will have to decide whether it is financially viable to offer online poker. With a population of only 8.5 million and the likelihood the market will be ring-fenced, it may not be worthwhile to provide games of online poker unless one operator is able to get a monopoly in the state – which, then, won´t be that good for players.

A Long Path that Might be Worth the Wait

With six stretched out processes – during which the progress could be stopped at any point – it´s going to be a long path for regulated online poker in Virginia. There is undoubtedly going to be highs and lows along the way; and just as the progress could be stopped at any point, it can also be restarted again. I don´t expect the path to be smooth by any means, but it´s fair to say Virginia´s legislature is not rushing ahead with a “tax-grab” proposal like several other states; and, in the long run, the wait could be worth it.

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