Virginia lawmakers have moved a step closer to legalizing online casino gaming after the state Senate approved Senate Bill 118 by a narrow margin. The measure passed 19-17 on Feb. 16 after initially failing earlier the same day by a 19-20 vote. Legislators reconsidered the proposal later and granted approval, reflecting deep divisions within the chamber over expanding digital gambling.

Regulatory Model And Financial Structure

According to Gambling Insider, the Senate version includes a delayed implementation date of July 1, 2027. Lawmakers added this provision shortly before final passage, ensuring that even if the legislation becomes law, online casino operations would not begin immediately.

Senate sponsor Mamie Locke described the proposal as a regulatory step, saying it would “legalize iGaming in the Commonwealth of Virginia and dramatically curtail Virginia’s thriving illegal iGaming market.”

SB 118 would place oversight of online casinos under the Virginia Lottery. Licensing would remain limited to operators of existing land-based casinos within the state. Each operator would pay a $500,000 initial license fee valid for five years, followed by a $250,000 renewal cost. Up to three platforms per operator would be allowed, each carrying a $2 million platform fee.

The legislation establishes a 20% tax on adjusted gross iGaming revenue alongside an additional 6% economic development fee. Most of the tax proceeds, specifically 95%, would flow into the Modern Public Education Fund. Smaller portions would support regulatory operations and problem gambling programs. The separate development fee would fund a Casino Gaming Hold Harmless Fund intended to offset potential revenue declines at physical casinos in Bristol, Danville, Norfolk, Portsmouth, and Petersburg. Equal payments would continue through July 2032 before operators must demonstrate any losses linked to online gaming.

Financial projections presented during the review suggest significant revenue potential. Estimates indicate state income of $343 million during the first fiscal year after implementation, rising beyond $1 billion annually by fiscal year 2032. Net iGaming revenue could reach $3.56 billion by fiscal year 2031 once the market matures.

Economic Concerns And Social Debate

Despite projected revenues, analysts expect possible declines in existing lottery income. Forecasts indicate Virginia’s iLottery revenue could drop 25.5% during the first year after legalization, with losses potentially reaching 53% below expected levels by fiscal year 2032. Separate projections from the Department of Planning and Budget place annual lottery profit reductions between $77 million and $163 million. Additional staffing costs for the Lottery could approach $1.16 million annually beginning in fiscal year 2028.

Opponents have focused heavily on social impact and addiction risk. During debate, Sen. Bill Stanley stated: “We are being asked to take the single most addictive device in human history, the smartphone … and now we’re being asked to put a slot machine on it, let that sink in for a moment.” He cited public health research indicating online gambling carries higher addiction risk than in-person wagering.

Some lawmakers also raised questions about effects on employment at land-based casinos and potential shifts in gambling spending patterns. Critics worry that easier mobile access could redirect spending away from traditional gaming venues.

SB 118 now moves to the House of Delegates, where lawmakers are considering a separate measure, HB 161. That proposal includes a requirement for approval in two consecutive legislative sessions before becoming law. If applied to the Senate bill, implementation could extend beyond the already planned 2027 date.

The two chambers must reconcile differences related to timelines, regulatory wording, and procedural requirements before final approval becomes possible. Other gambling measures advanced during the same session include legislation on daily fantasy sports, a potential Fairfax casino framework, and rules concerning skill-based games.

Even after clearing the Senate, the bill faces additional scrutiny before any online casino market can launch in Virginia. The next phase of legislative review will determine whether lawmakers move forward with regulation, adjust the proposal, or halt the expansion entirely.