Virginia rolls out initial sports betting rules. Big gambling platforms push back.
The Washington Redskins practice in Richmond in 2018. (Ned Oliver/Virginia Mercury)
Sports betting hasn’t arrived in Virginia in time for the start of the NFL season, but state officials are fine-tuning the rules for how the newly legalized industry will work when it starts up in early 2021.
This year, the General Assembly passed a bill authorizing the Virginia Lottery to grant between four and 12 sports betting licenses, greenlighting a type of gambling projected to generate up to $55 million in state tax revenue per year.
Sports betting in Virginia will start online, largely through mobile apps. However, it could eventually expand to the brick-and-mortar casinos being planned in several cities and the Rosie’s gambling establishments operated by Colonial Downs.
The Lottery is currently working through a public review of its proposed sports betting regulations, which could determine how quickly the industry takes off in the state and what Virginia bettors will see when the apps are launched.
During the review process, several big-name sports betting operators have taken issue with some of the consumer protection measures and other rules state officials are proposing.
The potential sticking points include:
Displaying handles and odds of winning
As parts of its draft regulations, state officials are developing what’s been dubbed the Sports Bettors Bill of Rights.
One particularly significant rule would require sports betting platforms to provide players with information that can help them make “informed decisions about their gambling,” including the odds of winning a bet and an explanation of how those odds were calculated, the handle (or total amount wagered) and payout amounts.
Major platforms like DraftKings and FanDuel have voiced strong opposition to that requirement, saying no other sports betting state in the country has imposed a similar mandate to display that information in real time.
Fanduel noted that it offered 24 types of bets for a recent NBA Playoff game, with more than 300 potential outcomes and a “nearly unlimited” number of possible parlay wagers. Having to calculate and present the numbers behind each bet on the fly, the company wrote, could create major logistical challenges in terms of both screen space and processing power.
“Sports betting apps are simply not built to provide and display this type of information,” the company wrote in its formal comments on Virginia’s draft regulations. “As such, this requirement would force a re-engineering of the products, to create a demonstrably worse user experience, and all to provide information which is immaterial to the calculation of the odds and/or payout a bettor will receive.”
Several companies said the rule on showing handles seemed to be a carryover from pari-mutuel horse race wagering that doesn’t translate to other sports.
Wagering on the performance of teams and athletes based on oddsmakers’ opinions of favorites and underdogs, the companies argue, is fundamentally different from more mathematically defined types of gambling like lottery tickets, dice rolls or card games.
“The actual odds that the Brooklyn Nets will beat the Toronto Raptors, and by how many points, [are] unknown,” FanDuel wrote.
The regulations include a detailed process to let players voluntarily ban themselves from betting on sports if they feel they’re getting addicted or losing too much money. As envisioned, would-be self-excluders could ban themselves for two years, five years or life, as long as they provide detailed information on themselves including their address, date of birth, social security number, phone number and a description of their physical appearance.
The sports betting companies have pointed to what they see as several flaws in the process.
For example, if a self-banned person is found to be using their platforms, the companies are required to freeze the account and “seize the individual’s winnings or other things of value.” The companies don’t seem interested in doing that, suggesting they should just confiscate the player’s winnings instead of taking everything in their account.
“It would be no more appropriate to require permit holders to seize the funds (not ascribable to winnings) in an individual’s account, any more than it would be for a casino operator to seize all the money in a self-excluded individual’s wallet if they were found to have entered the casino,” FanDuel wrote.
Some companies also suggested streamlining the process by having their platforms direct bettors wishing to self-exclude to the Lottery’s website instead of requiring them to do it through the apps they’re trying to avoid.
“This is akin to requiring an individual to enter a casino in order to ban himself from a casino,” wrote a representative for Caesars Entertainment.
Similarly, FanDuel suggested scrapping a rule that would force bettors wanting to ban themselves for life to do so in person, calling it a “potential barrier” that might discourage Virginians from using the most drastic option.
The industry also wants to get rid of a proposed rule allowing bettors to void their wagers through self-exclusion, saying it could create a way for them to get their money back once they realize they’re going to lose.
“For example, a patron may have a future wager on a team to win the Super Bowl,” wrote Penn National Gaming. “As soon as they know the team will not make the playoffs, they self-exclude in order to get a refund.”
The regulations also lay out strict rules for how sports betting platforms can advertise, prohibiting them from targeting minors and requiring them to submit “all advertising, marketing and promotional materials” to the Lottery for prior approval and prohibiting ads that violate “good taste.”
The betting platforms said the ad review process would be overly burdensome.
“By mandating an approval process for all advertising efforts, this will impact the ability to get promotions quickly posted, which is extremely important given the fast-paced nature of sports (e.g. playoff series being extended),” wrote Penn National Gaming.
Several companies suggested a more lenient process in which companies would notify regulators about their advertising plans without needing a formal sign-off in advance.
The rules also prohibit sports betting ads in media that cater to minors, prompting the industry to ask for more clarity on which social media platforms the state believes appeal “primarily to those under the age of 21.”
Betting on the Olympics
There has been concerted pushback against a rule preventing betting on the Olympics, a prohibition that wasn’t included in the General Assembly’s legislation.
Lawmakers did spend some time discussing what types of sports were and weren’t appropriate for betting, choosing to explicitly ban betting on college games involving Virginia schools. But the question of how to handle the Olympics was unaddressed until the draft regulations were released.
The platforms argue that excluding certain sports defeats the purpose of the legislation.
“In order to fully eradicate the illegal market, the legal market must be able to compete, which means including as wide an array of event and betting options for consumers,” DraftKings wrote. “The International Olympic Committee is an international sports governing body that ensures integrity across the events it oversees and, as such, the board can be assured events comport with ethical standards.”
The public comment period on the draft regulations ended Wednesday. The Virginia Lottery Board is scheduled to meet next Tuesday to vote on the new rules.
“We will continue to monitor and consider all public comments as we prepare the final draft of the sports betting regulations,” said Lottery spokeswoman Jennifer Mullen.
Once the regulations are in place, the Lottery will begin accepting applications for sports betting permits next month.
The interest from national gaming companies suggests many are already making plans for Virginia.
“We look forward to bringing our world class sports betting experience to Virginia soon,” said FanDuel spokesman Kevin Hennessy.
DraftKings spokesman James Chisholm said everyone involved in the process shares the goal of building a “customer-centric” sports betting market in Virginia, one that “pulls thousands of Virginians, who are already regularly betting on sports, off of illegal platforms.”
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