Sen. Adam Ebbin’s Fantasy Contests Act would impose a 10% tax on fantasy sports revenue generated by games played in Virginia and require operators to register and obtain state permits. Five percent of the tax receipts (0.5 percentage points of the 10% levy) would fund problem-gambler treatment; the remaining 95% (9.5 percentage points) would go to the general fund. Critics, including Americans for Tax Reform, warn the levy could be passed on to players through smaller prize pools and higher entry fees. The proposal is part of a wider package of tax measures Democrats have introduced since gaining a legislative majority.
Virginia Democrats Propose 10% Tax on Fantasy Sports, Require Permits for Operators
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Virginia’s newly strengthened Democratic majority has introduced legislation that would tax daily fantasy sports played inside the Commonwealth and require operators to register with the state before offering contests.
Sen. Adam Ebbin (D–Alexandria) is the sponsor of the Fantasy Contests Act, which would impose a 10% levy on fantasy sports revenue generated from games played by Virginia residents. Under the bill, 5% of the tax receipts (equivalent to 0.5 percentage points of the 10% levy) would be dedicated to the state’s problem-gambler treatment fund, while the remaining 95% of tax revenue (equivalent to 9.5 percentage points) would be deposited in Virginia’s general fund.
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The proposal also would require fantasy contest operators to register with the Virginia Department of Agriculture and obtain a permit before offering games to people in the Commonwealth. Reporting indicates the Virginia Lottery would have rulemaking and oversight authority over daily fantasy sports under the measure.
The measure has drawn criticism from free-market groups. The Washington think tank Americans for Tax Reform (ATR) published a detailed critique arguing that business taxes are typically passed on to consumers and that the new levy could lead to smaller prize pools, higher entry fees, fewer promotions and less competition.
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"As with every tax and fee imposed on businesses, the cost doesn’t stay with the company; it’s ultimately passed on to consumers," ATR wrote. "This new tax inevitably translates into smaller prize pools, higher entry fees, fewer promotions and bonuses, and less competition in the market. In other words, Virginia players are the ones who end up footing the bill."
ATR also argued that if fantasy sports are truly skill-based, they should not be taxed "as though they were a vice."
Similar legislative efforts are underway in other states. Reporting cited proposals in Illinois that would empower the state gaming board to tax and regulate fantasy play at rates between 10% and 15%.
Broader Tax Package
The fantasy-sports proposal is one item in a broader slate of tax measures introduced by Virginia Democrats since their recent electoral gains. Other proposals reported include a net-investment income tax on trusts and estates that would raise the Commonwealth’s top marginal rate to just under 10%, an 11% tax on ammunition, new taxes on home-delivery services (such as Amazon, UPS and Uber Eats), and an expansion of the state sales tax to additional goods and services. Separate reporting also noted Democratic plans to redraw congressional maps that could affect several Republican incumbents.
Fox News Digital reported it contacted Sen. Ebbin for comment on the fantasy-sports tax and how the measure aligns with campaign messaging on affordability, but had not received a response by press time.
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