Virginia Senate Narrowly Passes iGaming Bill SB 118, Sets July 2027 Launch Date

On Feb. 16, the Senate narrowly passed SB 118 by a 19-17 vote after initially rejecting it 19-20 earlier that day, then reconsidered and brought it back for approval. The close vote mirrored earlier subcommittee and committee votes, underscoring the chamber’s division over iGaming expansion. Crucially, the final Senate-amended version includes a delayed effective date of July 1, 2027.

The delayed implementation provision was added in a late-stage amendment before passage, meaning iGaming would not launch immediately even if the bill ultimately clears the House and the governor signs it into law.

What SB 118 Authorizes

The bill would authorize online casinos, subject to regulation by the Virginia Lottery.

Key provisions include:

• iGaming operator licenses available to existing Virginia casino operators
• $500,000 initial operator license (five-year term), $250,000 renewal
• Up to three platforms per operator, each requiring a $2 million platform fee
• A 20% tax on adjusted gross iGaming revenue
• An additional 6% economic development fee

Revenue allocation structure:

• 95% of the 20% tax to the Modern Public Education Fund
• 3% to the Gaming Regulatory Fund
• 2% to the Problem Gambling Treatment and Support Fund
• The 6% economic development fee would be directed to the Casino Gaming Hold Harmless Fund

The Hold Harmless Fund is designed to offset potential revenue losses to brick-and-mortar casinos in Bristol, Danville, Norfolk, Portsmouth, and Petersburg. Payments will be distributed equally among the five properties until July 1, 2032. Afterwards, operators must demonstrate revenue loss tied to iGaming.

Effective Date Pushed to July 2027

The July 1, 2027, effective date significantly alters the timeline. If enacted this session:

• By Jan. 1, 2027: Virginia Lottery promulgates and finalizes regulations
• July 1, 2027: iGaming authorization becomes effective
• FY28 (July 2027–June 2028): First projected revenue year

Fiscal Projections: Revenue Growth and Lottery Cannibalization

A JLARC fiscal review projects:

• $343 million in total state revenue in FY28
• Growing to over $1 billion annually by FY32
• Mature market net iGaming revenue of $3.56 billion by FY31

However, JLARC also projects significant cannibalization of Virginia’s iLottery:

• iLottery revenue projected to decline by 25.5% in FY28
• Decline reaching 53% below projected levels by FY32

The Department of Planning and Budget similarly warned that iLottery profit losses could range from $77 million to $163 million annually.

The Lottery is expected to incur approximately $1.16 million annually in additional personnel costs beginning in FY28.

Supporters: Regulating an Existing Market

On the Senate floor, SB 118 sponsor Sen. Mamie Locke framed the bill as a regulatory modernization effort. She argued it would “legalize iGaming in the Commonwealth of Virginia and dramatically curtail Virginia’s thriving illegal iGaming market.”

She emphasized that seven other states already operate regulated iGaming markets and have generated substantial tax revenue.

Opposition: Addiction and Market Cannibalization

Before voting, opponents raised concerns about addiction risk and access by minors.

Sen. Bill Stanley warned:

“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.”

Stanley cited research by Harvard School of Public Health, which found that online gambling is ten times more addictive than in-person gambling.

Critics of iGaming legalization also questioned the impact on the Virginia Lottery and brick-and-mortar casino employment. They’ve argued that mobile access could shift revenue away from existing gaming structures.

HB 161 in the House: A Second-Session Requirement

SB 118 now moves to the House, which is considering a separate measure, HB 161, that awaits a floor vote.

The bill advanced from two subcommittees and committees, receiving amendments along the way. A significant change requires passage in two legislative sessions. That means even if the House and Senate approve HB 161 this year, it would need to pass again in 2027 before becoming law. That would push the implementation date likely into 2028.

Because SB 118 already has an effective date of July 1, 2027, the House’s two-session requirement would operate more as an additional legislative checkpoint before authorization becomes final.

The two chambers will now need to reconcile:

• The Senate’s delayed-effective-date structure
• The House’s two-session requirement
• Potential differences in regulatory language

Senate Advances Broader Gambling Package

SB 118 joins several other gambling-related bills the Senate advanced this session, including:

• SB 129 (Daily Fantasy Sports reforms)
• SB 756 (Fairfax casino framework)
• SB 661 (skill games legislation)

Taken together, the measures suggest 2026 could mark another significant expansion year for Virginia’s gaming industry — though outcomes now hinge on House action.

What Comes Next

SB 118 now moves to the House, where lawmakers must decide whether to:

• Approve the Senate version
• Add a two-session requirement
• Modify the effective date
• Reject the bill

While the Senate has cleared the first hurdle, Virginia’s path to legalizing online casinos remains anything but certain.