Senate Bill 118 passed with a narrow 19-17 vote, following a late amendment to delay implementation until July 1, 2027, which will allow greater headroom for stakeholders to launch an iGaming market in the Old Dominion, permitting online casinos and sportsbooks.
However, that is far from guaranteed, with the proposal still required to receive assent from the House before it can be signed into law.
Even on the day SB118 was passed, it was initially rejected by the Senate, but a second vote got over the line because of amendments and concessions made.
The overall issue remains a divisive one, with many lawmakers firmly opposed to the proliferation of online gambling in Virginia.
What will Senate Bill 118 deliver?
Senate Bill 118 would enable existing land-based casino operators in Virginia to apply for an iGaming license, with each one costing $500,000 for a fixed five-year term.
Additionally, individual digital platforms operated under those licenses would be required to pay a $2m fee to enter the market.
The legislation in process has set out a 20% tax on adjusted gross iGaming revenue as well as a further tax earmarked as a subsidy for existing land-based casinos.
This has been described as a '6% economic development fee'.
Virginia's State purse will be in line for a significant boost if the legalization of iGaming is secured, with estimates predicting hundreds of millions in annual revenue once the market is established within a few years.
These tax revenues would predominantly be funnelled toward public education programs, while smaller amounts would be dedicated to gambling-harm prevention and essential gambling regulation needs.
SB 118 was sponsored by Democratic Sen. Mamie Locke, with the Democrat lawmaker giving the following contribution on the Senate floor:
"Senate Bill 118 will legalize iGaming in the commonwealth of Virginia and dramatically curtail Virginia's thriving illegal iGaming (online gambling) market and generate upwards of $14bn in new table revenue over the first five years and tens of billions of dollars every subsequent five years in perpetuity."
Her comments and motivation to strike a blow against the black market were echoed by Joe Maloney, president of the Sports Betting Alliance, the umbrella trade group for sportsbook and iGaming operators, including major platforms such as BetMGM and FanDuel:
"It's unfortunate that (illegal gaming) is increasingly more visible, because these are companies that are operating either in an unregulated manner, calling themselves sweepstakes casinos, or they're just outright illegal operation domicilled abroad that are serving mostly online ads to all types of US-based customers," said Maloney.
He is another figure to emphasize the need for player protections and a regulated space.
Opposition to legalized online gambling in Virginia
However, detractors will point to the potential dangers to young people and at-risk users.
One such proponent of this position is Sen. Bill Stanley, who warned:
"We are being asked to take the single most addictive device in human history, the smartphone … and now we're being asked to put a slot machine on it, let that sink in for a moment."
Other critics questioned the impact on the Virginia Lottery and the knock-on effect for land-based casinos in the state, and workers' employment prospects.
What happens next with Senate Bill 118?
SB 118 will now move to Virginia's House of Delegates, where it will find favor, or fall.
It will be considered alongside other related legislation that may require approval over two legislative sessions before final sign-off.
As in other states, this reflects the protracted process required to legalize online casinos and why approval from the Senate is no guarantee that the bill will ultimately be successful.
Conversely, the progress of SB118 secures further momentum for the industry and a significant potential uplift in state revenues.
