Virginia Gambling Statute Rating: 3,9/5 6042 reviews
Convenes January 13, 2021. Bills & Resolutions: Status of individual bills and related information General Assembly Members: Member sponsored legislation Standing Committees: Legislation referred to committee. Virginia Online Casinos: Laws. As it stands, the laws in Virginia prohibit gambling almost in its entirety. That means, any bet involving money in exchange for a chance to win a prize, stake, or other things of value, is against the law. There’s also a clause that refers to wagers you might place online at Virginia online casinos. Virginia Gambling Laws. Virginia is a great state for online gamblers, yet not so great for land-based gamblers. Virginia residents do most of their gambling on the internet, which means you have to be aware of the state online gambling laws. At this time, there are not online gambling laws in Virginia beyond a requirement that players be 21. Penalty for illegal gambling. Except as otherwise provided in this article, any person who illegally gambles or engages in interstate gambling as defined in § 18.2-325 shall be guilty of a Class 3 misdemeanor. If an association or pool of persons illegally gamble, each person therein shall be guilty of illegal gambling.
- Virginia Gambling Statutes
- Virginia Gambling Statute Of Limitations
- Virginia Gambling Statute
- West Virginia Sports Betting Statute
By: Jacob Newton
Playing casino style slot machines in Virginia may soon become a reality. House Bill 4 Lottery Board; regulation of casino gaming (the “Bill”), proposes an amendment to the Code of Virginia, which would expand gambling and gaming rights throughout the Commonwealth to include classic slot machine casino gambling.[1] The Bill will give the power to grant gambling to localities and Virginians across the Commonwealth will get the chance to vote if they want casino gambling inside local communities.[2] The Bill is still subject to the Governor’s approval, but Virginia lawmakers have given approval to the Bill to allow voters in Bristol, Danville, Richmond, Norfolk and Portsmouth to hold local referendums later this year to approve casinos.[3] The Governor has until 11:59 p.m., April 11, 2020 to take action on the Bill.[4]
Lawmakers are conflicted by the desire to keep the revenue of Virginian gamblers inside the state’s economy,[5] and the negative morality associated with gambling. Due to this conflict, they have been continuously making exceptions to Virginia Code § 18.2-326, the statute penalizing illegal gambling.[6] Even though lawmakers have been making exceptions to the general rule against gambling, they have been reluctant to legalize the most common type of gambling, the casino style slot machine[7]
Gambling machines that look and operate similar to the classic casino style slot machine are common within Virginia, even though the casino style slot machine is currently illegal in within the state’s borders.[8] The legality of these casino-like slot machines are possible because the exceptions to Virginia Code § 18.2-326 have been expanded or exploited to make the machines fit under specific exceptions.[9] The advancement of technology has transformed the gambling industry and created gray areas in need of defining.[10] One prevalent example of these exceptions to Virginia Code § 18.2-326 is Va. Code Ann.§ 18.2-340.15 (the charitable gaming exception).
The charitable gaming exception was legalized in 1973, making it the earliest exception to the criminality imposed upon gambling in Virginia.[11] It provides charitable gaming shall be permitted in the Commonwealth as a means of funding qualified organizations.[12] A qualified “organization” is defined by the statute as a volunteer emergency services organization operated exclusively for religious, charitable, community or educational purposes; athletic association or booster club; veterans; fraternal association or corporation operating under the lodge system; local chamber of commerce; or any other nonprofit organization that raises funds by conducting raffles that generate annual gross receipts of $40,000 or less, provided such gross receipts from the raffle, less expenses and prizes, are used exclusively for charitable, educational, religious or community purposes.[13] The list of qualified organizations is implicitly an exhaustive list meant to target specific types of organizations.
The types of gambling allowed under the exception permits qualified organizations to conduct raffles, bingo, network bingo, and instant bingo games.[14] Instant bingo closely resembles the classic slot machine and is provided for by statute.[15] Electronic pull-tabs are an electronic version of a single instant bingo card or pull-tab. The electronic pull-tab is a predetermined game outcome in electronic form, distributed on-demand from a finite number of game outcomes by a distributed pull-tab system.[16] The specifics of the machines are highly regulated by the charitable gaming board, but the machines still resemble a slightly watered down version of a classic slot machine because they operate at the press of a button and display symbols in the form of a crisscross.[17]
Some companies are charging potential gamblers a nominal lifetime membership fee to use the electronic pull tab machines and claiming to fall under the lodge system definition of qualifying organizations.[18] Specific companies are not listed because they do not advertise this on any platform. Companies using this method have essentially placed themselves in this category already carved out by the charitable gaming statute, and the Charitable Gaming Board has yet to condemn or approve this method. This is just one example of a gray area surrounding the legal boundaries of gambling in Virginia.
The legislative trend is moving toward complete legalization of casino slot style gambling in Virginia. However, “dancing” around compete legalization puts stress on local government and law enforcement to maintain the gray boundaries of the expanding amount of exceptions. If the Governor signs House Bill 4 Lottery Board; regulation of casino gaming, then Virginia will be one step closer to alleviating the pressure of maintaining those boundaries.
[1] Va H.R. 4, 1127 Leg. Session (2020).
[2]See id.
[3]See Associate Press, Virginia to expand gambling options, legalize casinos, WHSV 3 (Mar. 08, 2020, 4:48 PM), https://www.whsv.com/content/news/Virginia-to-expand-gambling-options-legalize-casinos-568611311.html
[4]SeeHB 4 Lottery Board; regulation and control of casino gaming, Virginia’s Legislative Information System (last visited Oct. 6, 2008), https://lis.virginia.gov/cgi-bin/legp604.exe?201+sum+HB4.
[5]See Gregory S. Schneider, ‘Boring’ no more? Virginia has already begun embracing casino-style gaming, Wash. Post (July 7, 2019, 1:00 PM), https://www.washingtonpost.com/local/virginia-news/boring-no-more-virginia-has-already-begun-embracing-casino-style-gaming/2019/07/07/79477f62-9db1-11e9-85d6-5211733f92c7_story.html.
[6]See Va. Code Ann.§ 18.2-340.15; Va. Code Ann.§ 18.2-334.3; Va. Code Ann.§ 59.1-364.
[7] Riverboat Gaming Commission with riverboat gaming, Va H.R. 2400, 1110 Leg. Session (1995).
[8] See generally House Bill 1609 (describing the functions of the historic horse racing machines); 11 Va. Admin. Code § 15-40-410 (2019) (describing electronic pull-tab bingo).
[9]See Va. Code Ann.§ 18.2-340.15; Va. Code Ann.§ 18.2-334.3; Va. Code Ann.§ 59.1-364.
[10]See IN THIS ISSUE: CULTURAL PRODUCTION IN A DIGITAL AGE: Digital Gambling: The Coincidence of Desire and Design, 597 Annals 65.
[11]See Va. Code Ann.§ 18.2-340.15.
[12]See id.
[13]See Va. Code Ann.§ 18.2-340.16.
[14]See Va. Code Ann.§ 18.2-340.22.
[15]See id.
[16]See 11 Va. Admin. Code § 15-40-410 (2019).
[17]See id.
[18]See Va. Code Ann.§ 18.2-340.16.
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Out-of-State Tax Credit and Gambling Winnings from Slot Machines
Records/Returns/Payments
05-28-2014
Re:Out-of-State Tax Credit and Gambling Winnings from Slot Machines
Dear *****:
This is in response to your letter to the Department of Taxation ('the Department') regarding the out-of-state tax credit and the gambling winnings that you ('the Taxpayer') received from slot machines. Because this response may be of interest to other taxpayers and practitioners, your letter is being treated as a ruling request under Va. Code § 58.1-204.
FACTS
In 2010 and 2012, the Taxpayer received gambling winnings from slot machines in West Virginia and paid taxes on that income to West Virginia. For the relevant taxable years, the Taxpayer was a resident of Virginia. Pursuant to advice from her tax preparer that the out-of-state tax credit does not generally apply to gambling winnings, the Taxpayer also paid taxes on her gambling winnings to Virginia on her 2010 and 2012 income tax returns. The Taxpayer contends that the out-of-state tax credit should apply to her gambling winnings and that the double taxation of her gambling winnings is unfair and discriminatory.
Va. Code § 58.1-332 A generally allows Virginia residents to claim a tax credit for income taxes paid to another state if the income is earned or business income or gain on the sale of a capital asset. The terms 'earned income' and 'business income' are defined in 23 VAC 10-110-221 for purposes of the out-of-state tax credit. 'Earned income' is defined as wages, salaries, or professional fees and other amounts received as compensation for professional services actually rendered. See 23 VAC 10-110-221 B2. 'Business income' is defined as income derived from an activity which constitutes a business for federal income tax purposes for which federal Schedule C, E, or F must be filed. See 23 VAC 10-110-221 B3.
In addition to this general out-of-state credit, Va. Code § 58.1-342 B grants the Department the authority to enter into an agreement with another state to exempt nonresidents from the Virginia income tax when they receive compensation from working in Virginia if such other state similarly exempts Virginia residents. Virginia entered into such an agreement with West Virginia in 1988 (see enclosed). This reciprocity agreement exempts Virginia residents from the West Virginia income tax and from the requirement to file a West Virginia income tax return with regard to compensation paid in West Virginia. In exchange for this treatment, West Virginia residents are exempt from the West Virginia income tax and filing requirements for compensation paid in Virginia.
Similar to the general credit under Va. Code § 58.1-332 A, the terms of the reciprocity agreement apply only to specified types of income. For purposes of the reciprocity agreement, 'compensation paid in West Virginia' is compensation described in W. Va. Code § 11-21-41, which includes salaries, wages, or compensation for personal services performed in West Virginia.
In this case, the Taxpayer received gambling winnings from slot machines located in West Virginia. The Department has held on numerous occasions that gambling winnings are generally not earned or business income for purposes of the out-of-state tax credit. See P.D. 99-47 (4/2/1999), P.D. 98-159 (10/20/1998), P.D. 95-171 (6/23/1995), P.D. 95-164 (6/22/1995), and P.D. 95-152 (6/12/1995). The Taxpayer's gambling winnings from slot machines are not earned income because the income was not compensation from professional services rendered.
Nor has the Taxpayer demonstrated that her gambling winnings consist of business income. For an individual's gambling activities to be considered a trade or business, the gambling activities must have been pursued full time, in good faith, and with regularity, to the production of income for a livelihood, and not a mere hobby. See C.I.R. v. Groetzinger, 480 U.S. 23 (1987), and P.D. 95-152. Unless the Taxpayer provides facts showing that her gambling activities met the above requirements, the Taxpayer's gambling winnings are not considered business income and do not qualify for the out-of-state tax credit.
It is well-established that the taxation of income by more than one state is not unconstitutional. The Supreme Court held that the Due Process Clause does not prevent the taxation of personal income by more than one state. See
Virginia Gambling Statutes
Curry v. McCanless, 307 U.S. 357 (1939) and Graves v. Elliott, 307 U.S. 383 (1939). The Supreme Court also held that double taxation alone does not violate the Equal Protection Clause. See Illinois Cent. R. Co. v. State of Minnesota, 309 U.S. 157 (1940), Guaranty Trust Co. of New York v. Commonwealth of Virginia, 305 U.S. 19 (1938), and Ft. Smith Lumber Co. v. State of Arkansas ex rel. Arbuckle
, 251 U.S. 532 (1920). Therefore, there is no legal authority preventing Virginia and West Virginia from imposing taxes on the Taxpayer's gambling income.CONCLUSION
For the foregoing reasons, the Taxpayer will not be eligible to receive the out-of-state tax credit for gambling winnings from slot machines located in West Virginia unless she demonstrates that her gambling activities constituted a trade or business for federal income tax purposes. The Code of Virginia provisions and regulations cited, along with other reference documents, are available online in the Laws, Rules & Decisions section of the Department's website, located at www.tax.virginia.gov.
Virginia Gambling Statute Of Limitations
If you have additional questions, please contact ***** in the Office of Tax Policy, Policy Development Division, at *****.- Sincerely,
Virginia Gambling Statute
Craig M. BurnsWest Virginia Sports Betting Statute
Tax Commissioner
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