- Bally’s, Penn National and Golden Nugget Online Gaming have been approved to offer mobile and online sports betting in Virginia.
- All of the approved companies have additional pointless bureaucratic hoops to jump through before they can start taking bets.
- Virginia is a demographically attractive market that will underachieve because of buffoonish regulation by the state’s lottery commission.
The Commonwealth of Virginia is destined to be a mixed bag for sports betting. Demographically, it should have a booming sports betting sector that makes everyone a ton of money while attracting jobs and investment.
Unfortunately, it was created under the auspices of the Virginia Lottery which implemented a regulatory framework that is essentially a ‘greatest hits compilation’ of boneheaded sports betting laws. High taxes? Check. Dubious restrictions on betting options for no good reason? Check–in this case there’s no betting on Virginia college teams for..uh….reasons. Arbitrary limits on the number of companies that will be licensed? You know it–there are few things states that are bureaucratic hell holes love more. It might not have the worst lottery run sports betting in the US–no one can top Tennessee even though Oregon and Montana are in the mix. Just letting the lottery run sports betting results in stifled competition and diminished revenue for everyone involved.
This isn’t to say that a sports betting company can’t make a decent amount of money there. They can–as can the state tax revenues. Where state lotteries underachieve significantly is in creating an environment that facilitates ancillary economic benefits from sports betting. Under the lottery, there are a limited number of financial beneficiaries but on a macro level the state economy sees little to no benefit such as investment and job creation.
At any rate, I’m glad to see companies I’m invested in launch in Virginia. They’ll no doubt make a ton of money and that’s exactly why I own their stock. They’ll offer players as decent of a betting experience as they’re allowed to do under state regulations. Were I living in Virginia I definitely wouldn’t be rushing to bet locally instead of offshore. Unfortunately, the sad reality is that in most states with legal sports betting players are *still* best served by betting the same way they always have–offshore or though a local.
VIRGINIA APPROVES THREE NEW COMPANIES TO OFFER SPORTS BETTING
Virginia has approved three new companies to offer mobile/online sports betting and I own stock in all three. Bally’s Corporation, Golden Nugget Online Gaming and Penn National Gaming (for their Barstool Sportsbook app) are now ‘temporarily licensed’ meaning that they’re conditionally approved pending jumping through a serious of unnecessary bureaucratic hoops. Each company issued a press release so let’s run through them:
Bally’s Corporation (NYSE: BALY) didn’t give information on an anticipated launch date. They spoke instead about extending their footprint into a 13th state:
The announcement also marks Bally’s entry into the attractive Virginia gaming market, expanding the Company’s national presence into 13 states once all pending acquisitions are completed, including CO, DE, IL, IA, IN, LA, MO, MS, NJ, NV, PA, RI, and VA. Such market access and licensure are subject to legalization and required approvals by regulatory authorities in each jurisdiction.
George Papanier, President and Chief Executive Officer of Bally’s Corporation, had this to say about the temporary licensing in Virginia:
“Bally’s is pleased to receive the temporary sports wagering permit from the Virginia Lottery. This represents another step in our evolution to become the leading omnichannel gaming provider in the U.S., and we look forward to providing a first-class experience for sports fans across Virginia.”
Bally’s has also submitted a proposal to build a land based casino property in the Richmond, Virgnia area. As a BALY stockholder, I think this is a really bad move on their part.
Penn National Gaming (NASDAQ: PENN) also declined to give a launch timeline for their Barstool Sportsbook app saying only that they’re “working closely with the Lottery on the launch timeline.” That’s a laugh–Penn National knows what they’re doing and could likely launch next week if the Virginia Lottery would get out of the way.
President and CEO Jay Snowden delivered the press release quote for Penn National:
“We very much look forward to introducing our Barstool Sportsbook online sports betting product in Virginia. Following our very successful launches in Pennsylvania, Michigan and Illinois, I’m confident that Virginians will also enjoy engaging with Dave Portnoy, Dan ‘Big Cat’ Katz and other Barstool fan favorites on our Barstool Sportsbook app in the Commonwealth.”
“I want to thank the Virginia Lottery and its staff for their time and effort in reviewing and approving our application We look forward to adding Virginia to our portfolio of states where we operate sports betting as we continue our Company’s evolution into the leading omni-channel provider of retail and online gaming, live racing and sports betting entertainment.”
Golden Nugget Online Gaming (NASDAQ: GNOG) made me gag a little bit by opening their press release talking about how they were awarded “one of the few coveted online sports gaming licenses to be awarded in Virginia.” No better way for a state to set up a successful competitive gaming market than to make your licenses bargaining chips for politicians and bureaucrats. Unfortunately, this has become de rigueur for gaming in the politically corrupt states in the Northeast. And, yes, as any true Southerner knows Virginia is in the Northeast.
Golden Nugget Online Gaming is one of the real ‘under the radar’ sports betting providers at the moment and Virginia will make it 10 states for them. In their PR quote from Thomas Winter, President of GNOG he let it slip that all of the red tape the lottery will throw at them will mean that they won’t start taking bets until ‘this Summer’:
“We thank the Virginia Lottery for the opportunity to expand our online business into the Commonwealth of Virginia. Together with our SWaM certified equity partner, Virginia Sports Technology Group, we are excited to announce that GNOG will not only be providing Virginians with a great mobile sportsbook, we will be proudly sharing our revenues with Virginia’s Historically Black Colleges & Universities. We will be working hand in hand with the regulators over the next couple of months to complete all of the required and standard platform testing so that we will be in a position to start taking bets this summer.”
Another fun thing about Virginia sports betting–companies are required to involve a local small business owned by women and/or minorities. Since there are exactly zero existing businesses of this type with experience in sports betting it ends up going to a hastily arranged shell corporation operated by politically connected or juiced in principals who may or may not actually be female or minorities. In this case, ‘Virginia Sports Technology Group’ was incorporated in October 2020 and their ‘corporate address’ is a nice residential property in Vienna, Virginia.
Not sure whether the ‘revenue sharing’ with Virginia’s historically black colleges and universities is specifically mandated by regulations. That’s an excellent cause to be sure but there’s no reason it or any other worthy charitable endeavor should be codified in gaming regulations. GNOG’s quote sums up all of the problems with lottery run sports betting in general and Virginia’s in particular. The way that sports betting can benefit the economic interests of the entire state is to create a highly competitive ecosystem like Colorado’s. This not only brings in tax revenues but also makes companies want to do business there, invest there, create jobs there, etc. Creating regulatory mandated perks and set-asides for politically connected stakeholders is the antithesis of this.
At the time of publication, James Murphy has a long position in PENN, BALY AND GNOG.
