Virginia Sports Betting August Handle Up, Revenues Down
In August, Virginia’s sports betting industry experienced contrasting trends, as revealed by the latest report from the Virginia Lottery Board.
The total amount wagered by bettors, known as the handle, showed a year-over-year growth of 12.1%, reaching $319 million. That’s also well up on July’s $300 million figure.
However, this increase in betting activity did not translate to a rise in revenue for Virginia online sportsbooks. The adjusted gross revenue from sports betting stood at $27.9 million, marking an 11.3% decrease from the $31.4 million recorded in August 2022.
Mobile Betting Dominates, But Hold Rate Drops
Mobile betting continued to be the preferred choice for bettors in Virginia, as it is across regulated U.S. markets.
The mobile betting handle was $315.6 million, reflecting a 10.9% year-over-year increase. Virginia retail sportsbooks, meanwhile, reported a $3.55 million handle for the month, but that’s currently just one venue (Hard Rock Bristol).
Two more retail sportsbooks may open in 2024, at the under-construction Caesars Danville and a potential casino in state capital Richmond.
Despite the growth in mobile betting, the hold rate for operators in August was 8.7%. That’s a significant drop from the 11.8% in August 2022. This decline in hold rate played a pivotal role in the reduced revenue for the month.
Promotional offers for Virginia’s sports bettors also dried up somewhat over the month. August’s stats revealed $743,000 in promotional credits deducted, which is down on July’s $827,000.
That may be because Virginia’s sports betting regulations only allow tax deductions on promotional bets for 12 months after a sportsbook opens, and many of the big players are scaling back now that the grace period has ended.
Tax Contributions: A Closer Look
Virginia imposes a 15% tax on the Adjusted Gross Revenue (AGR). For August, this translated to operators contributing $4.2 million in taxes.
Breaking down the tax allocation, $4.1 million will go into the General Fund Allocation, while $100,000 is designated for the Problem Gambling Treatment and Support Fund Allocation.
So far this year, as reported by local news outlet K13NewsNow, Virginia’s sports betting operators have paid $67 million in taxes in the 2023 fiscal year.
That’s up on the $27 million paid last year, and well more than the $55 million annual revenue predicted by state-employed analysts before sports betting was legalized in the state just two years ago.
Problem Gambling Rates Low
During a Lottery Board meeting earlier this month, the behavioral health commissioner for Virginia, Nelson Smith, also spoke on gambling addiction.
He confirmed that more than $2.6 million was set aside last year for responsible gambling campaigns and problem gambling treatment. He also said that his department believes around 2% of the Virginia population displays problematic gambling patterns.
Overall, August’s decline in revenues, despite an increase in handle, highlights the intricacies of the sports betting industry.
A few upset sports results, or a market trend the bookmakers spot too late, can easily be exploited by bettors to eat into revenues.
With the Virginia Lottery not disclosing specific information about individual operators, a detailed understanding of market dynamics remains a challenge.