After online casino legislation received swift approval in March 2019, West Virginia has been waiting for the first online casino to launch. Well, the wait might be coming to an end.
West Virginia online casinos could finally be live this summer.
The West Virginia Lottery, which regulates legal gambling in the state, initially scheduled the launch of online casinos for spring 2021. However, since Gov. Jim Justice shuttered brick-and-mortar casinos, the absence of a pandemic-proof revenue stream became more evident.
What’s going on with West Virginia online casinos now?
On April 29, the WV Lottery Commission approved a set of emergency rules related to the launch of online casinos. It plans to send those regulations to the WV Secretary of State’s office for approval in mid-May.
Upon such approval, the WV Lottery can start granting interim licenses. That would allow WV casinos to offer online poker, slots, and table games for a period of 270 days.
The WV Legislature is the only body that can make the regulations permanent. It’s uncertain when the Legislature will do so, although estimates suggest it could happen early next year during their regular session.
Each master license holder can contract with up to three operators under the emergency regulations. Operators would pay a $100,000 licensure fee.
Vendors like software providers must also receive licensure from the state at a rate of $10,000. The state would tax gross betting revenue at a rate of 15%, allowing for comps.
Among other requirements are standard practices like pre-approval of advertising materials. The operators have to compile weekly reports of interactions with individuals on self-exclusions lists as well.
The March 2019 legislation that legalized online casinos in the Mountain State set a deadline of July 1 for the Lottery to approve regulations, so the Lottery has now fulfilled that obligation.
What is taking WV online casinos so long?
Although it’s unclear exactly why the WV Lottery waited over a year after the state government legalized iGaming to set interim rules, that time frame is the issue. It’s a curious situation.
WV also legalized sports betting in March of last year. Just four months later, legal sportsbooks were taking wagers in the state. That suggests online casino gambling simply hasn’t been a priority for the Lottery. WV Del. Shawn Fluharty, who sponsored the iGaming bill, concurs with that assessment.
“While the legislation was immensely popular and bipartisan, which is rare for a ‘gambling’ bill,” Fluharty commented.
“The support from WV Lottery was lacking. The same goes for the Governor’s office.”
Another possible factor is a bit of “sour grapes” by Justice. Legal sports betting in WV passed without the royalty for sports leagues that Justice wanted.
There’s no evidence that Justice directed the Lottery to delay the submission of regulations for iGaming.
WV Lottery Director John Myers said that the work was ongoing throughout the past year and that the extended timeframe for implementing the rules came because the iGaming legislation passed so quickly after the sport betting law.
What is clear, however, is that the state missed a golden opportunity because of the delay. Regardless of why it took over a year to set interim rules, that fact will cost the much-needed revenue.
The delay in launching online casinos is costly
The potential benefit to the state that legal iGaming could have provided should be obvious. While the state’s brick-and-mortar casinos have been shuttered due to COVID-19, online casinos could have filled in the gap.
Amplifying that factor is the fact that online sports betting didn’t provide much relief. With most North American major sporting events either delayed or suspended, handle at the state’s four legal sportsbooks wasn’t large enough to replace retail casino revenue.
The WV Lottery also saw a drop in retail sales of Mega Millions and Powerball tickets. Those factors contributed to a total decline in revenue of 46% or $51 million from March to April of this year.
It’s hard to quantify precisely how much of a positive impact iGaming would have had if available during the shutdown. The fact that sales of draw-style Lottery tickets, which don’t require contact with others to buy, actually increased during the shutdown suggests it could have been significant.
Research suggests casino patrons and Lottery players aren’t necessarily the same crowd, however. Also, a loss of income experienced by many in WV might have limited their entertainment budgets and thus prevented them from playing online casino games as well.
Regardless, any revenue from iGaming would have been more than the zero the state received from that vertical during March and April. It could mean a big difference for more than just the Lottery as well.
Services for West Virginians will face budgetary decisions
Gambling tax revenue in WV funds state programs for senior citizens and students. The same goes for services for those with compulsive gambling issues, state parks, and tourism.
With the WV Lottery in danger of missing the $1 billion in annual sales mark for the first time in nearly two decades, all those state programs will see their financial resources cut. In response, they will either have to cut services or make up for the shortfalls in other ways.
If that results in further cuts to staff hours and salaries or seniors’ meal services, the financial strain put on the state by the coronavirus pandemic could extend.
Help seems on the way, however. WV’s brick-and-mortar casinos could reopen as soon as May 11 if testing protocols allow. The established threshold is three percent or fewer of total tests showing a positive result.
Back in March 2019, it would have been difficult to foresee all the effects of a viral pandemic that closed down casinos in West Virginia. The Lottery deserves credit for moving amidst the shutdown to establish rules for online casino gambling.
The tragedy, however, is that it took a viral pandemic to initiate that action.