West Virginia Sports Betting Law
West Virginia was the first state to pass a truly comprehensive sports betting omnibus: HB415, or the West Virginia Lottery Sports Wagering Act of 2018 (aka Article 22D of the West Virginia Code). This West Virginia sports betting law was signed into effect on March 3, 2018, about six weeks before the Supreme Court formally overturned the Professional and Amateur Sports Protection Act (PASPA, 1992), which prevented sports betting from being available legally inside WV state borders.
Introduced to the state congress as HB 415, Article 22D establishes everything from which agency will oversee sports betting in the state and how much its licensees will pay in fees and taxes to what forms of wagering will be allowed and where WV residents can go to place their bets. Because of the complete nature of this single piece of legislation, West Virginia is set up to be one of the very first states to offer legal on-site sports betting to its nearly two million residents and countless visitors to the state.
The most pressing concern that most potential WV sports bettors have when it comes to state-legalized athletics wagering is what exactly the West Virginia sports betting law allows. The short version is that it allows sports betting on pretty much anything you want (including amateur events like NCAA football and the Olympics to professional NFL, MLB, NBA, NHL games, and more). In other words, sports betting is legal in West Virginia, full-stop.
The only caveat is that any West Virginia sportsbooks operator or bookmaker has to fully abide by the terms of Article 22D. The following section of the law begins laying out those terms, and you can be sure that applicants are lining up to get a piece of this multi-billion-dollar pie.
West Virginia Code §29-22D-6 clarifies that all West Virginia sports betting businesses are state-owned, meaning that bookmakers are technically “private operators” of a governmental service. Further, this section indicates that at the rollout of WV sports betting services, only five (5) such operator licenses will be awarded statewide. (Note: A licensee may operate several wagering locations under a single license, and if the WV Lottery itself becomes a licensee – or has an exemption – it is conceivable that electronic sports betting kiosks could be made available in convenience stores at gas stations and other common lottery ticket vendor locations statewide.)
The cost to become a licensed sports betting operator in WV is $100,000 (renewable at that price every five years), and it restricts the locations of on-site sports betting sites primarily to racetracks and established, historic hotel-casinos in the state. Licensees must also be bonded and make available to the state office space for auditing services. Further, they must all keep adequate cash on hand to cover all sports betting payouts on any given day.
West Virginia Code §29-22D-11 and §29-22D-12 lay out all the customer service and facility rules that licensed operators must abide by, including mandated postings of house rules and financial obligations of both houses and patrons, systems to monitor wagering irregularities, prevention of any patron or employee from tampering with betting systems, and so on.
The West Virginia sports betting law bans a number of things. Primarily banned are licensees that have criminal records or those who are guilty of some violation of various “moral turpitude” standards in the financial or gambling industries. These license prohibitions are thoroughly covered in §29-22D-10.
Individual bettors may also be banned from any WV sports betting facility per the terms of §29-22D-15, though this is at the operator’s discretion. However, all banned persons must be accounted for in operators’ logs, and these bans are nominally permanent (albeit an appeal system seems to be in place). Further, anyone banned from one West Virginia sports betting location is banned from all West Virginia sports betting activity throughout the state.
When it comes to what the West Virginia sports betting law omits, it is remarkably coherent, concise, and complete. There are no blatant or obvious oversights in the text of HB 415, and most of the legislation is explained adequately for the layman.
The bill covers licensing, player rights, player exclusions, illegal gambling definitions, financial allocations, tax rates, and law enforcement, among several other topics. In short, there is no obvious loophole for an unlicensed bookmaker to get away with running his business “legally” in the state.
The only real “omission” in the bill is that it doesn’t address West Virginia’s main competition in the sports betting realm: legal offshore sportsbooks that have been serving the state for years. Of course, that is probably outside of the purview of the WV state government, but later variations of this bill (or new laws, particularly federal laws) could address these Internet betting shops in the future.
West Virginia residents have been using online, overseas sports betting sites for over 20 years now (Bovada, SportsBetting, BetOnline, etc.), and those companies share hundreds of thousands of clients from the Mountain State. The question of how legal offshore sportsbooks will be affected by federal law and West Virginia sports betting law, then, is an apt one, and it is a natural cause for concern for all the gamers who have their wagering funds tied up in other countries.
Fortunately, there is not any prohibition in HB 415 (Article 22D), as the bill makes it explicitly clear that only unlicensed state-based bookmakers would be in violation of the law (§29-22D-20). As with federal anti-gambling laws, individuals placing bets with unlicensed or illegal operators are not guilty of any crime. And because offshore sportsbooks operate outside of WV and US jurisdiction, they are not bound by these laws, so you remain free to use such services. Other laws may be introduced that ban WV residents from frequenting such sites, but there is no such law established in Article 22D.
The biggest hurdle facing each state in their efforts to force mass adoption of their area sports wagering services has to do with how the states choose to tax the industry. Taxation and fees in the West Virginia sports betting law are covered throughout HB 415, primarily in §29-22D-16 and §29-22D-17. Here are the key points outlined in these sections:
The most important financial point is this: Licensees will be charged a 10% tax on their “adjusted gross sports wagering receipts.” This is a fancy way of saying that, for the privilege of operating a sportsbook, the West Virginia sports betting law demands 1/10th of the house take on all sports bets. This is referred to as a “privilege tax.” This privilege tax will be collected on a weekly basis, and operators will be able to carry over net losses as a deductible from the next week’s take.
Fortunately, the privilege tax replaces all other tax liabilities that the sportsbook would otherwise carry, with the exception of property taxes. What these other taxes constitute (and how their values figure into alleviating the large hit of the privilege tax rate) is currently unknown. However, use taxes and sales taxes are not included in the mandatory 10% privilege tax, which will hopefully give low-margin WV sportsbooks a bit of a reprieve.
The only problems with the West Virginia sports betting law are the same that all states’ laws will face in the wake of the PASPA overturn: taxation rates. Unlike other casino games, sports betting bookmakers do not have enormous house takes. They turn by far the highest handle, but most of that is paid back out in winnings. In other words, sportsbooks have a small profit margin (6-9% is considered above average), and a high taxation rate can literally kill their business before it ever gets off the ground.
The West Virginia sports betting law pegs the privilege tax at 10% while working in some deductions, but this may not be enough to keep traditional sports betting moneylines reasonable. For example, a book in Las Vegas might only pay 6.75% of their take in taxes, and – because the sportsbooks there are tied to massively more lucrative casino games and slots – they can eat that with relative ease. Such may not be the case when you’re wagering at a horse track in West Virginia, however, and a 10% rate on the take could simply be too high.
Thus, where Vegas or an online sportsbook can give you a -110 moneyline on the Mountaineers to cover, you might have to pay -120 to place that same bet in WV. Whether or not this would be enough to turn new players away towards better, more economical solutions like legal offshore sportsbooks remains to be seen. However, all the hundreds of thousands of WV bettors that already use these services are unlikely to switch their books to a local vendor with those built-in losses on the line. Convenience is king, yes. But cash is also king. And historically, cash is the king of the hill.
How old does the West Virginia sports betting law say I have to be to bet?
To bet on sports at on-site WV books, the West Virginia sports betting law says you have to be at least 21 years old. However, you only have to be 18 in order to wager at legal offshore sportsbooks (Bovada et al.).
Will I be arrested for using a legal offshore sportsbook instead of a local licensed bookmaker?
Absolutely not. The West Virginia sports betting law – HB 415 – has no provisions for the arrest of any resident who uses a legal offshore sportsbook instead of a local licensed bookmaker.
What does the West Virginia sports betting law say about Bitcoin and cryptocurrency?
The West Virginia sports betting law says nothing about Bitcoin and cryptocurrency, though this doesn’t mean that such payment options will not be accepted going forward. However, all major online, offshore betting sites already accept a variety of cryptos, including Bitcoin, Litecoin, Bitcoin Cash, and Ethereum.
Do I have to pay taxes on my winnings when I bet on sports in WV?
Yes. While it is unclear if your winnings will be taxed as income before any West Virginia sportsbook pays out your funds (as is the case in Nevada), you will have to pay income tax (or some other variety of gains tax) on your winnings, as these will be reported to the IRS by your sportsbook. The same is true even if you use offshore sportsbooks, although in that case, you will be wholly responsible for claiming any income via such sites (as they are not obligated to file any documentation with the IRS).
Does the West Virginia sports betting law include mobile wagering?
Yes! Mobile sports betting is recognized as the number-one driving force for the entire sports betting industry, and the West Virginia sports betting law has several provisions allowing operator licensees the ability to provide online and mobile betting solutions for WV residents. Whether or not any official Apple or Android apps will be available for your iPhone or Android phone remains to be seen, but mobile betting via your handset’s or tablet’s browser is going to be a critical component of WV’s sports betting strategy.