Online Gambling Bill Delayed in West Virginia

West Virginia's state capitol building

30-second summary

  • West Virginia puts online gambling on the back burner
  • Keno and VLT expansions continue in the state
  • The DOJ’s changing opinion on online gambling is playing a factor
  • Two online sports betting platforms are up and running

Online gambling on the back burner

West Virginia has plans to legalize all forms of online gambling. But, despite making good progress, it appears that legalize online casino gambling won’t be legalized for the time being.

The state will still go ahead with allowing retail locations being able to have video lottery terminals (VLTs) and more keno offerings. The state’s lottery director, John Myers, spoke to the House Finance Committee about this decision. He says that the issue will be reconsidered soon.

While some say that the decision is a result of the DOJ’s new stance on the 1961 Wire Act, others believe that the state authorities don’t want to mess with a successful system. In 2018, the projections for lottery revenues were surpassed by more than $25m (£19.4m).

Summary of the online gambling bill

Five Democratic lawmakers wanted to legalize online gambling in 2019. The bill, H3067, was originally proposed in March 2018. The main sponsor is Delegate Shawn Fluharty. It would allow West Virginia casinos in West Virginia to offer online gambling.

The West Virginia Lottery Commission would be the regulator. A minimum age of 21 for gambling would be established. The bill also calls for state authorities to negotiate gambling compacts with neighboring states.

The licensing fee would be $50,000 (£38,800), way below Pennsylvania’s $10m (£7.8m) license fee. The tax rate on gross gambling revenue would be 14%.

Drastic change in stance by DOJ

US gambling stakeholders are in disarray after the Department of Justice did a U-turn on its opinion about online gambling. In 2011, the opinion of the Wire Act of 1961 in 2011 was that it was only applicable to online sports betting. However, the DOJ is now saying that it actually applies to all forms of online gambling.

They have now put in place a 90 deadline for states to fall in line with this new position. Naturally, those online gambling stakeholders are in disarray and have a lot of confusion with regards to the matter.

Not much direction has been given by the DOJ, so it isn’t clear what specific forms of online gambling will be affected. Unless some more clarification comes out with regards to the matter, legislators will be treading carefully.

If the ban goes ahead and it spells the end for most online gambling operations in the United States, there will likely be significant legal action taken against the DOJ’s new decision.

Recent gambling expansion in West Virginia

The state has recently made other gambling expansionary moves. West Virginia was one of the first states to make sports betting legal after the end of the federal ban in May 2018. The annual license fee for sports betting operators is $100,000 (£77,600) and there is a 10% tax on adjusted gross revenues.

A bill was ready to go a couple of months before the Supreme Court even made its decision to end the ban. Therefore, the state was ready to get up and running in September, ahead of their neighboring states. Sports betting opened in West Virginia in time for the start of the football season, which was a strong source of revenue.

As part of a new bill, keno tickets will be on sale at many more locations, such as convenience stores. Previously, these tickets could only be bought at clubs and bars that had a license from the Alcohol Beverage Control Administration. The bill will allow those operating VLTs to sell keno tickets. This will help to improve margins because the state takes 50% of the profits on VLTs.

It seems that online casinos will eventually arrive in West Virginia. Two casinos, Mardi Gras and Wheeling Island, are already operating online sports betting platforms. Others are in the process of getting approval.