Code Section 18.2-325 et seq.; 59.1-364 et seq. Gambling Making, placing or receiving any bet or wager of money or other thing of value, dependent upon the result of any game, contest, or event the outcome of which is uncertain or a matter of chance. Horse Racing/Off-Track Betting. Gambling Laws in Virginia Virginia is limited when it comes to legal gambling options. Within the state’s borders, residents won’t find casinos, racinos, card rooms, tribal casinos, or sports betting. The only types of gambling activities that are approved in the state are daily fantasy games, the lottery, and pari-mutuel horse race bets. 2011 Code of Virginia Title 18.2 CRIMES AND OFFENSES GENERALLY. Chapter 8 Crimes Involving Morals and Decency (18.2-325 thru 18.2-403.4) 18.2-326 Penalty for illegal gambling. Code of Virginia. Table of Contents » Title 18.2. Crimes and Offenses Generally » Chapter 8. Crimes Involving Morals and Decency » Article 1. Gambling » § 18.2-334.3. Exemptions to article; state.
Re: §58.1-1821 Application: Individual Income Tax
Conducting illegal gambling operation; penalties. The operator of an illegal gambling enterprise, activity or operation shall be guilty of a Class 6 felony.
Dear***************
This will reply to your letter of March 20, 1995, in which you and your spouse (the 'Taxpayers') protest the disallowance of an out-of-state tax credit claimed on your Virginia return for taxable year 1992.
The Taxpayers are Virginia residents who won the Maryland lottery several years ago and have received yearly payments since that time. The Taxpayers are required by Maryland law to file annual tax returns and pay income tax as nonresidents on their gambling winnings.
For years prior to 1992, a Maryland nonresident could claim a credit against his Maryland tax liability for taxes paid to his state of residence, but only if his state of residence afforded Maryland residents the same treatment. Because Virginia has such a statute, the Taxpayers were able to claim a credit against their Maryland nonresident tax liability for the income tax paid to Virginia on the gambling winnings. Maryland changed its laws and repealed this credit for nonresidents, effective for taxable years beginning after December 31, 1991.
When the Taxpayers filed their 1992 Virginia return, they claimed a credit for income taxes paid to Maryland on their gambling winnings because they were no longer able to claim this credit on their Maryland nonresident return. The Taxpayers' Virginia return was subject to an office audit by the department and the credit was disallowed, resulting in an assessment. The Taxpayers believe the assessment is incorrect and hereby request relief.
Code of Virginia §58.1-332(A) provides that '[w]henever a Virginia resident has become liable to another state for income tax on any earned or business income...derived from sources outside the Commonwealth and subject to taxation under this chapter, the amount of such tax payable by him shall...be credited on the taxpayer's return with the income tax so paid to the other state.'
The above statute does not provide a credit for all tax paid to another state, rather it limits the credit to tax paid to 'earned or business income' from sources outside of Virginia. While the statute itself does not define 'earned or business income,' Virginia Regulation (VR) §630-2-332 does define these terms for the purposes of the credit.
VR §630-2-332 defines 'earned income' as;
- ...wages, salaries, or professional fees and other amounts received as compensation for professional services actually rendered, but does not include that part of the compensation derived by the taxpayer for personal services rendered by him to a corporation which represents a distribution of earnings or profits rather than a reasonable allowance as compensation for the personal services actually rendered. Earned income does not include interest or dividend income, capital gains, income from investments, or similar types of passive income.
The regulation defines 'business income' as;
...income derived from an activity which constitutes a 'business' for federal income tax purposes for which a federal Schedule C, E, or F must be filed, for example, a sole proprietorship, provided that if the business incurred a loss such loss would be allowable under federal law. Thus income from hobbies and other activities not engaged in primarily for profit is not business income even though a Schedule C, E, or F may be filed for such activities.
- ...wages, salaries, or professional fees and other amounts received as compensation for professional services actually rendered, but does not include that part of the compensation derived by the taxpayer for personal services rendered by him to a corporation which represents a distribution of earnings or profits rather than a reasonable allowance as compensation for the personal services actually rendered. Earned income does not include interest or dividend income, capital gains, income from investments, or similar types of passive income.
In this case, the gambling income received by the Taxpayers resulted from placing a small wager (i.e. purchasing a ticket from a state sponsored lottery) and winning a substantial prize payable over a series of years. The payor of the prize, as is customary, purchased an annuity in order to satisfy the obligation to the Taxpayers. The Taxpayers report this income as 'other income' on their federal income tax return.
Due to the specific nature of Code of Virginia §58.1 -322(A) and the corresponding regulation, the department is unable to find that the gambling winnings received by the Taxpayers fall within the definition of earned or business income. These winnings clearly do not compensate the Taxpayers for services rendered, the requirement for income to fall within the definition of earned income.
Additionally, the gambling winnings received by the Taxpayers do not constitute income derived from a trade or business. There is long-standing federal policy that requires gambling activities to be pursued full-time, regularly, and for production of income for one's livelihood before such activities can be considered to be a trade or business. In addition, the collection of sweepstakes winnings have been held not to constitute a trade or business for federal income tax purposes. See Max Silver. Petitioner.V. Commissioner of Internal Revenue. Respondent, (1940) 42 BTA 461.
A Virginia resident deriving income from sources outside of Virginia will be exposed to the risk of such income being subject to double taxation because Code of Virginia §58.1 -332(A) restricts the credit to earned or business income. As a consequence of the change in Maryland law, the Taxpayers are now required to pay tax to both states on their gambling winnings. However, it is well established that the taxing of income by more than one state is not illegal or unconstitutional. The U.S. Supreme Court held the Due Process Clause does not prevent the multiple taxation of personal income by more than one state. See Curry v. McCanless, (1939) 307 U.S. 357 and Graves v. Elliott, (1939) 307 U.S. 383.
Although I am sympathetic to your situation, the department has no authority under the current law but to deny your request for relief. Attached is a schedule indicating the tax liability plus interest accrued through the date of this letter. The assessment should be paid in full within 30 days to avoid the accrual of additional interest. Please forward your payment to the Office of Tax Policy, the Virginia Department of Taxation, P.O. Box 1880, Richmond, Virginia 23282. Should you have additional questions regarding this matter, please contact****************.
- Sincerely,
Danny M. Payne
Tax Commissioner
- Sincerely,
Virginia gambling laws are strict about some types of gambling, but lax about
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Online Gambling and Virginia Law
Is Online Gambling Legal in Virginia?
Virginia doesn’t have any specific internet gambling laws, but their existing
laws cover online gambling. Nothing in the Virginia legal code makes any
specific distinction between online and land-based gambling.
According to section 18.2-325 of the Virginia Code, gambling devices are
defined as:
“a. Any device, machine, paraphernalia, equipment, or other thing, including
books, records and other papers, which are actually used in an illegal gambling
operation or activity, and
b. Any machine, apparatus, implement, instrument, contrivance, board or other
thing, or electronic or video versions thereof, including but not limited to
those dependent upon the insertion of a coin or other object for their
operation”
Gambling devices include electronics. A computer can be counted as a gambling
device, which are illegal in Virginia.
Can I Get Arrested for Gambling Online in Virginia?
Va State Code Gambling Laws
You could get arrested for gambling online in Virginia, but no one has as of
yet.
If you’re charged with illegal gambling, section 18.2-326 of the Virginia
Code states the penalty for illegal gambling as follows:
“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 law enforcement is focused on stopping illegal casinos and poker
rooms throughout the state, not online gamblers. This isn’t unusual in the
United States. Most law enforcement working in vice categories like this focus
their enforcement activity on providers rather than customers.
Is Virginia Going to Legalize Online Gaming?
It’s hard to say if Virginia is going to legalize online gaming. The state
has outlawed casinos; however, it uses the internet for the lottery. A print and
play option is available on the Virginia Lottery website for lottery, bingo,
blackjack, and crossword games.
If Virginia continues their trend of legalizing online forms of gaming,
websites for legal, regulated gambling could be available soon.
How Do I Choose a Good Online Gaming Site?
If you’re not willing to wait for legalization, plenty of offshore gambling
companies in foreign jurisdictions are willing to take your action. Be aware
that patronizing these businesses might be technically illegal, although the
risk of arrest and prosecution is minimal. (We’ve never seen
reports of anyone being arrested for playing at an online casino.)
Our advice, of course, is to obey the law in Virginia – or anywhere else. That
doesn’t mean we’re naïve. We know that some of our readers make decisions about
certain legalities related to their risk level, and playing online casino games
for money presents little risk.
Here are some things you should do before signing up at an offshore betting
site, though:
- Read Reviews –
Search for reviews from past and present users about the site
you’re considering. Reading the reviews gives you a good idea of the advantages
and disadvantages of the site from the
member’s point of view.Keep in mind that not all reviews on the internet are legitimate reviews from
real players. Many reviews are just sales letters or advertisements labeled as
reviews. Look for reviews that seem to be written from the first-person point of
view. Also look for reviews that offer insights into both the pros and the cons
of a specific site.We offer thorough, honest reviews on our site.
- Check Deposit Options –
Research what deposit options the site offers to see
if they accept what you use or something you’re comfortable using. Being able to
get money to and from the site easily is essential to having fun at a gambling
site. - Game Variety –
Make sure the site you’re considering has your favorite games
and ones that you might want to try. Having a good variety of games keeps you
entertained. It’s silly to sign up at an online casino that only offers slot
machines if you want to play live dealer blackjack, for example.
Are Offshore Gambling Sites Safe?
Offshore gambling sites are safe if you know how to look for legitimate ones.
Before choosing an offshore gambling site, research their licensing and how
long they’ve been in business. By researching those two things you can find out
restrictions and fees involved with the site. You can also determine if they
have a stream of loyal customers.
Gambling at an offshore site will never offer the same level of safety and
protection you’d have at a casino in Las Vegas. If you have a dispute with a
business in a foreign country, the hoops you’d have to jump through to take any
kind of legal action are ridiculous and expensive.
For this reason – any many others – we suggest only gambling with money you can
afford to lose.
Are Daily Fantasy Sports Legal in Virginia?
Yes, Virginia was the first state to legalize daily fantasy sports. Residents
must be 18 or older to play.
Daily fantasy sports sites must pay a $50,000 one-time fee to Virginia to
legally operate in the state.
Also On This Page
Gambling Venues in Virginia
The History of Gaming Laws in Virginia
The Furture of Gambling in Virginia
More Gambling Laws in Virginia
- Casino Games (Illegal)
- Sports Betting (Legal)
- Race Betting (Legal)
- Lottery (Legal)
- Bingo (Charitable Gaming Only)
- Social Gambling (Legal)
According to section 18.2-325 of the Virginia Code, illegal gambling is
defined as:
“the making, placing or receipt of any bet or wager in the Commonwealth of
money or other thing of value, made in exchange for a chance to win a prize,
stake or other consideration or thing of value, dependent upon the result of any
game, contest or any other event the outcome of which is uncertain or a matter
of chance, whether such game, contest or event occurs or is to occur inside or
outside the limits of the Commonwealth.”
Casino Games: Illegal
No casinos, tribal or otherwise, are legal in Virginia.
The penalties for conducting illegal gambling operations according to section
18.2-328 of the Virginia Code are the following:
“The operator of an illegal gambling enterprise, activity or operation shall
be guilty of a Class 6 felony. However, any such operator who engages in an
illegal gambling operation which (i) has been or remains in substantially
continuous operation for a period in excess of thirty days or (ii) has gross
revenue of $2,000 or more in any single day shall be fined not more than $20,000
and imprisoned not less than one year nor more than ten years.”
Owning a slot machine or other devices for gambling is illegal in Virginia.
Here’s the penalty for illegal possession of a gambling device according to
section 18.2-331 of the Virginia Code:
“A person is guilty of illegal possession of a gambling device when he
manufactures, sells, transports, rents, gives away, places or possesses, or
conducts or negotiates any transaction affecting or designed to affect
ownership, custody or use of any gambling device, believing or having reason to
believe that the same is to be used in the advancement of unlawful gambling
activity. Violation of any provision of this section shall constitute a Class 1
misdemeanor.”
Sports and Race Betting: Legal
Richmond Va Gambling
Horse racing and pari-mutuel wagering is legal in Virginia. You can bet on
and off track in Virginia, with authorized betting terminals located throughout
the state–including terminals in restaurants.
Here’s what section 18.2-133 of the Virginia Code says about sporting events:
“Nothing in this article shall be construed to prevent any contest of speed
or skill between men, animals, fowl or vehicles, where participants may receive
prizes or different percentages of a purse, stake or premium dependent upon
whether they win or lose or dependent upon their position or score at the end of
such contest.”
Here’s what section 18.2-334.4 of the Virginia Code says about pari-mutuel
wagering:
“Nothing in this article shall be construed to make it illegal to participate
in any race meeting or pari-mutuel wagering conducted in accordance with Chapter
29 (§ 59.1-364 et seq.) of Title 59.1.”
Betting on a horse race in an unauthorized fashion, such as an office bet, is
illegal in Virginia.
Here’s what section 18.2-326 of the Virginia Code says about the penalty of
betting on horse races outside of authorized options:
“if any person makes, places, or receives any bet or wager of money or other
thing of value on a horse race in the Commonwealth, whether the race is inside
or outside the limits of the Commonwealth at any place or through any means
other than (i) at a racetrack licensed by the Virginia Racing Commission
pursuant to Chapter 29 (§ 59.1-364 et seq.) of Title 59.1 or (ii) at a satellite
facility or through advance deposit account wagering, as those terms are defined
in § 59.1-365, licensed by the Virginia Racing Commission pursuant to Chapter 29
(§ 59.1-364 et seq.) of Title 59.1, such person shall be guilty of a Class 1
misdemeanor.”
Greyhound racing is illegal in Virginia.
Lottery: Legal
Virginia has a state-regulated lottery. The proceeds from the lottery go
toward public education.
Here’s what the Virginia Lottery website says:
“Since 1988, the Virginia Lottery has been producing fun and exciting games
for Virginians to enjoy. When players have fun, the Lottery has fun! With every
game purchase, sales increase, and more profits can be turned over to the
Commonwealth. And since 1999, 100% of the Lottery’s profits support Virginia
public education, K-12.”
The Virginia Lottery offers multiple games including draw games, scratchers,
print ‘n play, and promotional games. Scratcher prices range from $1 to $30.
Bingo: Charitable Gaming Only
Charitable gaming is legal in Virginia. Only certain organizations are
permitted to run charitable games. These include charitable organizations and
fire departments.
Here are the games that section 18.2-340.22 of the Virginia Charitable Gaming
Provisions allows:
“This article permits qualified organizations to conduct raffles, bingo and
instant bingo games. All games not explicitly authorized by this article or
Board regulations adopted in accordance with § 18.2-340.18 are prohibited.”
Here’s what section 18.2-340.15 of the Virginia Charitable Gaming Provisions
says about charitable gaming:
“Charitable gaming as authorized herein shall be permitted in the
Commonwealth as a means of funding qualified organizations but shall be
conducted only in strict compliance with the provisions of this article. The
Department of Agriculture and Consumer Services is vested with control of all
charitable gaming in the Commonwealth. The Charitable Gaming Board shall have
the power to prescribe regulations and conditions under which such gaming shall
be conducted to ensure that it is conducted in a manner consistent with the
purpose for which it is permitted.”
In general, bingo permits only allow bingo games to be played two to four
days a week, but special permits can be granted to allow play every day of the
week.
The maximum bingo prize money or merchandise defined by the Virginia
Charitable Gaming Provisions is the following:
“9. No organization shall award any bingo prize money or any merchandise
valued in excess of the following amounts: a. No bingo door prize shall
exceed $50 for a single door prize or $250 in cumulative door prizes in any one
session; b. No regular bingo or special bingo game prize shall exceed
$100; c. No instant bingo, pull tab, or seal card prize for a single card
shall exceed $599; and d. No bingo jackpot of any nature whatsoever shall exceed
$1,000, nor shall the total amount of bingo jackpot prizes awarded in any one
session exceed $1,000. Proceeds from the sale of bingo cards and the sheets used
for bingo jackpot games shall be accounted for separately from the bingo cards
or sheets used for any other bingo games.”
The maximum amounts listed above are the general amounts, and some exceptions
can be made on approval.
Social Gambling: Legal
Social gambling in private residences is legal in Virginia. Virginia
residents can play casino games in their home as long as the house doesn’t take
a cut of the pot.
Here’s what section 18.2-334 of the Virginia Code says about gambling in
private residences:
“Nothing in this article shall be construed to make it illegal to participate
in a game of chance conducted in a private residence, provided such private
residence is not commonly used for such games of chance and there is no operator
as defined in subsection 4 of § 18.2-325.”
Gambling Venues in Virginia
Va State Code Gambling License
No casinos can be found in Virginia, but bingo halls are located throughout
the state.
History of Gambling in Virginia
1973Charitable gambling laws are decided by the local governments.
1989The Virginia Racing Commission, or VRC for short, is created to oversee pari-mutuel betting.
1995A bill attempting to create a riverboat gaming commission is denied by the committee.
1997Virginia’s only horse track, Colonial Downs, opens.
2003Off track betting facilities are now overseen by the VRC.
2013Another bill attempts to legalize riverboat gambling and it fails.
Additional Resources
Casino Gambling In Va
The Future
Bills to legalize riverboat casinos have been proposed several times, but at
this point they’ve failed each time. The Virginia government seems determined to
keep land-based or boat casinos from coming to their state.
Va Gambling Laws
Although Virginia has outlawed casino gambling, it’s been legalizing forms of
online gaming. For example, Virginia legalized daily fantasy sports before any
other state, and the state lottery has utilized the internet for some time.
Based on these facts, Virginia gambling sites with state-regulated games could
be coming in the near future.