Virginia Democrats are moving forward with a plan to tax fantasy sports, a move that could significantly alter the landscape for players and operators in the Commonwealth. The proposed legislation, the Fantasy Contests Act, authored by Senator Adam Ebbin, D-Alexandria, would impose a 10% tax on revenue generated from fantasy sports games played within the state.
The tax revenue would be allocated as follows: 5% – or 0.5 percentage points of the overall 10% – would be directed to Virginia’s problem-gambler treatment fund, while the remaining 95% (9.5 percentage points) would flow into the state’s general fund. The bill also requires fantasy sports contest operators to register with the Virginia Department of Agriculture and obtain a permit before offering games to residents.
The move is part of a broader wave of new tax proposals being advanced by Virginia Democrats, targeting a range of areas including trusts, estates, ammunition and home-delivery services. According to Americans for Tax Reform, these proposals represent a significant shift in the state’s economic approach.
House Bill 145, proposed by Delegate Paul Krizek, recently passed a House subcommittee vote, signaling momentum for the legislation. The bill mandates that fantasy sports operators secure three-year permits, with application and renewal fees contributing to regulatory oversight and enforcement. It also establishes stricter player safeguards, requiring participants to be at least 21 years old and implementing age verification processes.
the legislation requires operators to segregate player funds from operating funds and maintain sufficient cash reserves to ensure timely prize payouts. Violations of the rules could result in penalties, license cancellations, or permit withdrawals, with external experts potentially appointed to oversee enforcement.
The proposed tax has drawn criticism from groups like Americans for Tax Reform, which argue that such levies ultimately burden consumers. “As with every tax and fee imposed on businesses, the cost doesn’t stay with the company; it’s ultimately passed on to consumers,” the organization stated in a critique of the plan. ATR also questioned the rationale for taxing fantasy sports, arguing that if the games are skill-based – relying on players’ knowledge of sports to draft and manage teams – they shouldn’t be treated as a vice subject to taxation.
Other states are also considering increased oversight of the fantasy sports industry. Illinois, for example, is contemplating legislation that would grant its gaming board the authority to tax and regulate fantasy sports at rates ranging from 10% to 15%.
Beyond the fantasy sports tax, Virginia Democrats have proposed a net-investment income tax on trusts and estates, potentially raising the state’s top marginal tax rate to just under 10%. Additional proposals include new high-tax brackets, an 11% tax on ammunition purchases, a tax on home-delivery services, and an expansion of the state sales tax to include previously untaxed purchases. These proposals come as Democrats have also sought to reshape the state’s political map through redistricting efforts.
The Virginia Lottery would have rulemaking and oversight authority over daily fantasy sports, according to Gambling Insider. The potential impact of these changes on the fantasy sports industry in Virginia remains to be seen, but the legislation signals a growing trend toward increased regulation and taxation of the rapidly evolving sector.
