Although West Virginia has moved quickly into the sports betting market, its progress in the area of online gambling has not been nearly as quick. Currently, although sportsbook operators intend to begin online operations shortly, online casinos remain stalled due to lack of approval from the state. The prospects for swift passage of online gambling remain unclear.
West Virginia has made two attempts to legalize online casinos in the past two years. The first attempt was a bill named HB 3067 that was introduced in March 2017 by five co-signers. The bill would have permitted physical casinos in West Virginia to also offer online casinos. The bill ran into immediate opposition. The West Virginia House Speaker did not support the bill and casinos did not undertake a significant lobbying effort to support the bill. The legislation never received a vote and died in the last legislative session shortly after it was proposed.
Features of the Bill
The bill, as introduced, would have set a low licensing fee of $50,000 for applicants and a reasonable tax rate of 14 percent. These rates are much lower than the licensing and tax rates in neighboring Pennsylvania. The legislation would legalize all forms of online gaming, including poker.
Like the other states that have legalized online casinos, games would have been limited to those players that were physically present in the state at the time of playing. The West Virginia Lottery Commission, which would be the regulatory entity for online gaming the state, would be permitted to enter inter interstate gaming compacts. HB 3067 would require the Lottery Commission to establish the regulatory rules that would implement online gambling in the state. The bill was short on specifics as to how online casinos would operate, leaving it up to the Lottery Commission to decide. However, HB 3067 does state that the internet branding shall be the licensed entity’s own name and not that of a third party. This would impact potential partnerships between West Virginia casinos and other internet operators. Partnerships would not necessarily be forbidden, but could take on a different form than they do in other states. At the same time, HB 3067 would ban operation of unlicensed casinos in the state, which would include offshore entities.
Undeterred by the failure of the first bill, the sponsors re-introduced the legislation again at the outset of the 2018 legislative session. The bill was referred to committee after introduction, and it has made no further progress since then. Although it was speculated that this version of the bill may receive a hearing, none has yet been held. With neighboring Pennsylvania having undertaken a dramatic expansion of gambling in the state, West Virginia risks seeing its gaming industry lose its competitive position.
West Virginia Casinos' Prospects
West Virginia casinos have been struggling in general as gambling options have proliferated both online and in neighboring states. West Virginia held a strong competitive position, but gambling revenues have fallen by roughly half from what they were a decade ago as neighboring Maryland has taken market share from West Virginia. The state’s main casino, Hollywood Casino at Charles Town Races has lost players to a major new casino in Maryland, MGM Grand, located about 90 minutes away. In 2017, casinos’ revenues fell by seven percent from the previous year. Thus, there is an imperative for West Virginia to act to prop up its struggling gaming industry. There is no specific timeline for the approval of online casinos in West Virginia.
The state’s 2018 legislative session ended in March without HB 3067 receiving a vote. West Virginia only has a three month window to enact bills as its legislature has a short session. It remains to be seen how the 2018 state legislative elections will affect the prospects for passage of the bill. The current legislature seems intractably opposed, and the forces in favor of legalization simply do not have the numbers yet to pass the bill. The bill is likely to be re-introduced at the next legislative session. At that time, the impacts of Pennsylvania’s broad legalization of gambling will be better known and may inform the legislative process for this bill.