Virginia announces Rules and Timelines for Legalized Sports Betting.

By: Ifrah Law

Today is the day that many have been eagerly awaiting; the day the Virginia Lottery’s Board discussed the state’s draft sports betting regulations. People are already comparing the draft rules to those of other states, particularly Tennessee, and Virginia appears to compare favorably. Below, we examine some of the highlights of those regulations.

During the presentation, Board Chairman Ferhan Hamid asked a significant question to Lottery Director Kevin Hall on whether the proposed regulations would include a mandated 10% hold, similar to that of the hold in Tennessee. Hall described the provision as “controversial,” but said that no such provision was included in Virginia’s model. Beyond that statement, the Board did not discuss the substance of the draft regulations.

The draft regulations specifically outline five different kinds of licenses, all of which have a term of three years:

1. The “permit,” which appears to be a master license for operators. The associated fee is $250,000 due upon issuance with a $200,000 renewal fee.
2. Principal licenses for managerial employees of the permit holder and suppliers. The associated fee is $50,000 per principal employee with a $50,000 renewal fee.
3. Supplier licenses for suppliers that will operate the platform. The associated fee is $125,000, of which $10,000 is the actual license fee and the rest serves to cover administrative costs. The administrative costs are refundable, so applicants can recover funds that were not expended on admin costs. The renewal fee is $50,000, comprised of a $10,000 license fee and a (refundable) $40,000 administrative fee.
4. Supplier licenses for suppliers that will not operate the platform. The associated fee is $50,000 with a $5,000 fee for licensing and a (refundable) $45,000 fee for administrative costs. The renewal fee structure is the same as that for the initial license.
5. Vendor licenses, which are not subject to background checks. The associated license and renewal fees are both $500.
6. Employee licenses. The associated license and renewal fees are both $500.

Temporary permits

The proposed regulations allow temporary permits to be issued to any “apparently qualified applicant” at the sole discretion of the Director for a period of six months. These permits may be renewed once for an additional six months. In order to maintain the temporary permits, applicants must be in the process of applying for a relevant license.

Number of licenses

The draft regulations do not directly establish the number of licenses to be issued. Instead, they state that if the number of applicants exceeds the maximum number of licenses allowed in the statute, the Director should discard any applications that are deficient, and then rank the rest qualitatively. The best two-thirds of applicants would then be approved, and the Director would decide whether it is in the state’s interests to grant permits to the others. The draft regulations do not address the requirement that casino applicants be entitled to preferential treatment, and they do not state what would happen if approving two-thirds of applicants would exceed the statutory maximum.

Finally, the Board members also were briefed by staff on the timeline for their finalization and implementation:

• July 15: Issuance of initial draft regulations for 60-day comment period, as well as guidelines for the self-exclusion program and the Sports Bettors’ Bill of Rights.
• August 10: Issuance of additional draft regulations for 30-day comment period.
• September 15: Finalization of regulations.
• October 15-31: Acceptance of applications and beginning review of applications.
• January 2021: Issuance of licenses, with operators allowed to go live.