Big jackpots, online gambling lift Virginia Lottery revenue 37% in late 2020

in Lottery

RICHMOND — The launch of mobile lottery gambling lifted the Virginia Lottery to a strong finish in 2020, with sales and profits substantially up from the previous year.

During a board meeting Wednesday, lottery officials chalked up the strong results to two major factors — big jackpots in the Powerball and Mega Millions lotteries, and the launch of the lottery’s mobile apps.

The financial results do not include revenue from sports betting in the state, which launched in late January.

From July to December of last year, the Virginia Lottery had total sales of $1.43 billion, and recorded profits of $350 million. The revenue is a 37% increase over the same time frame in 2019, and the profits are a 21% increase.

Early returns beat expectations for iLottery sales, the mobile app that the General Assembly authorized last year.

Those sales contributed $264 million to the lottery’s revenues, and executive director Kevin Hall said at the meeting it appears the introduction of the lottery app has not cut into sales at brick-and-mortar outlets.

Instant scratchers available through the app pay out at a higher rate than ones bought at convenience stores, though, meaning every dollar produces less profit for the lottery.

A document listing unaudited financial results showed mobile tickets paying out at an 88.1% rate on every dollar, while physical scratchers pay out at 70.6% on every dollar.

The lottery also reported it hit its goal of lifting its internal spending at small, women- and minority-owned businesses to 38% of its total spending, and increased its goal to 42% for the current fiscal year.

During the meeting, the Virginia Lottery board approved the “emergency casino regulations,” which will serve as a placeholder for the final document that will regulate brick-and-mortar casinos about to be built across the state.

The governor is expected to sign the regulations into effect in the next two months, but no casinos are close to being operational yet — the goal is to give them a framework as they plan their services.

Voters in four cities — Bristol, Danville, Norfolk and Portsmouth — approved casinos in November’s local referendums. Richmond could hold a referendum this coming November on a potential casino.

The document covers security procedures, tax payments and other regulatory items. There will be a $15 million issuance fee to receive a license to operate a casino, and every employee working there must receive a background check, with some roles requiring more extensive criminal checks.

The documents showed that slot machines will have an average payout between 89% and 94% at Virginia casinos.

Also Wednesday, Virginia’s fifth sports betting provider went live. Caesars, which will operate a casino in the state, opened its mobile betting operation in conjunction with global sportsbook William Hill.

Lottery official Gina Smith said at the meeting that many other providers are expected to go online in the next few weeks.

No financial results are available yet for the early performance of sports betting in the state. The first reporting will be due on Feb. 20, but companies can offset their promotional expenses, meaning the first few months of data are unlikely to reveal much, as all of the major players have offered substantial financial incentives to new customers.