After a disappointing February, the sports betting industry as a whole rebounded in March. Jurisdictions like Virginia benefited as sportsbook operators accepted approximately $470 million in bets which was the second-highest total since its launch.
Breaking Down Virginia’s Sports Betting Handle
March’s sports betting handle noted an increase of 16.8 percent from February’s $401.9 million. The record was set back in January as the handle hit $485.5 million. When comparing the year-over-year numbers, March 2022’s handle signified an increase of 54.4 percent.
This didn’t come as a surprise as this was the first March Madness tournament since 2019 due to the pandemic. In the Old Dominion, there are currently 12 mobile sportsbook operators as Hard Rock Sportsbook was the latest to enter the market on March 31st.
Gross revenue also saw an improvement for the month as it was higher by 22.6 percent from February as bookmakers combined to have a hold percentage of 7.2 percent. However, when compared to March 2021, the hold rate was 1.5 percent lower. Operators in March 2021 had gross revenue of $26.6 million.
Promotional credits were prevalent in Virginia once again as sportsbooks distributed $14.1 million. Subsequently, the amount distributed decreased 10.8 percent from February’s total of $15.8 million. Even though the numbers declined, it still marked the seventh consecutive month where operators handed out at least $14 million in promotional credits.
The adjusted revenue was $14.3 million. Based on the tax rate, the state was able to collect $2.1 million in taxes.
Virginia Continues to Offer Sportsbook Operators Tax Breaks
Ever since Virginia’s sports betting launched, the sports betting revenue has been offset by the continuous tax breaks that are given to these operators. The Richmond Times-Dispatch recently reviewed Virginia Lottery and has discovered interesting results.
Operators have combined to give $168.8 million in promotional credits across numerous platforms since the bookmakers accepted wagers in January 2021. The bonuses can be deducted from each sportsbook’s adjusted gross revenue before the tax rate is applied.
Because the law is structured in this way, the state has generated $26.7 million in revenue. This is quite low for a state that has produced an overall handle which produced $4.5 billion. Only five of the 12 sportsbooks currently operating in the Old Dominion have paid taxes since launching.
What Could Be a Plan Moving Forward
Write-offs of promotional credits mean that the state will collect fewer taxes than the total potential, as it has negated 43.7 percent of revenue.
Caesar Sportsbook has the largest market share in Virginia’s sports betting market, which is slated at 9.7 percent. The operator has yet to make a single tax payment since launched.
The reasoning behind the write-offs is it would allow Virginia to become a prominent market in the industry. However, states like New York have shown massive numbers without the implementation of the system.
This year, Del. Mark Sickles introduced a bill to eliminate tax relief, but it didn’t make it out of the committee and wasn’t voted by the General Assembly.