Vermont’s House of Representatives on Friday passed a long-awaited bill that would legalize online sports betting in the state — and earmark some of the revenue to mitigate a sharp rise in problem gambling that officials expect will follow suit.
Lawmakers agreed to a series of amendments to the bill, H.127, late Thursday night and gave it final approval Friday. The bill passed almost unanimously.
Under the amended bill, Vermont would take at least 20 percent of the adjusted gross revenue that sports betting operators — such as DraftKings and FanDuel — make in the state each year.
The state will also charge each company an annual operating fee that varies depending on how many other companies are in the market here. If Vermont contracts with one carrier, it would charge $550,000. But if there are six — the maximum allowed under the bill — each would pay $125,000.
Vermont lawmakers have long known, based on data from states where online sports betting is already legal, that the practice would be a modest source of new revenue.
Gov. Phil Scott’s proposed budget for fiscal year 2024 projects that the state will bring in $2.6 million. But the Legislature’s Joint Fiscal Office estimated this week that — after tweaks to the bill in the House Money Committee — the state can only expect to bring in $2 million.
Rep. Diane Lanphere, D-Vergennes, who chairs the House Appropriations Committee, said during a hearing on H.127 Monday that state officials will need time to fully understand the revenue implications.
“It’s going to be volatile until things settle down in the first five years — until we can handle what we think the revenue can be, consistently,” she said.
The Joint Fiscal Service also estimated that sports betting revenue will increase to at least $4.6 million in fiscal year 2025 and could reach $10.6 million.
House lawmakers agreed Thursday to create a “sports betting fund” to hold the revenue and fees the state Department of Liquor and Lotteries will collect in its role of overseeing sports betting in Vermont. The department already uses similar pools, known as enterprise funds, to manage alcohol control measures and the state lottery.
In fiscal year 2024, the state would allocate $250,000 from the Department of Mental Health’s wagering fund to programs to address problem gambling and double that money the following fiscal year, according to the amended bill.
The House also passed an amendment proposed by Congressman Matt Birong, a Vergennes Democrat and lead sponsor of the bill, that would toughen the penalties the state would impose on people and companies that violate the state’s online sports betting rules.
The state will fine sports betting operators up to $25,000 for a first offense; $75,000 for a second offense; and $150,000 for a third offense. Officials can also terminate a company’s license to operate here if it violates the new statute.
“After taking testimony about how the fine structures of other states are not enough to deter criminal behavior that is seen as the cost of doing business for some people, I felt we needed to escalate (penalties),” Birong said in an interview Thursday.
The amended bill also includes a last-minute provision from the House Ways and Means Committee requiring the state to negotiate a cap on the amount of money it and sports betting operators can spend on ads on betting platforms.
The committee was responding to concerns that Vermonters are being inundated with ads from sports betting companies, a trend that is widespread in other states.
Wendy Knight, the liquor and lottery commissioner, told the House Appropriations Committee on Monday that she thought the measure was “unnecessary” because the bill already requires betting companies to submit an advertising plan to the state.
House lawmakers essentially ran out of time before Friday’s carryover deadline to further discuss the advertising restrictions language, Birong said, so they decided to leave it in the bill for consideration in the state Senate, the bill’s next stop.