NORFOLK, Va. - Since online sports betting became legalized in Virginia in 2021, people have bet more than $3.7 billion, according to the Virginia Lottery.
As March Madness heats up, News 3 is investigating where all the money from the sports wagering goes when people place a bet on apps like FanDuel and DraftKings.
"We're still in the early days of sports betting and I think the market will develop with time," said Del. Mark Sickles (D-Fairfax), who sponsored the legislation that legalized sports betting.
"It's not as lucrative source of income for the state like a casino would be or the lottery is," he said.
For example, in January, people in Virginia bet more than $485 million, which set a new record thanks to the NFL playoffs.
Those who bet won about $446 million, which is called the "handle."
That left about $39 million for the sportsbooks, but that number includes promotions and bonuses. The sportsbooks don't have to pay taxes on those.
Once all of that is calculated out, the sportsbooks were left to pay taxes on about $18 million. They have to pay 15%on taxes on that figure, which brought the state just under $3 million.
"I think it's very popular. I think people are glad we've done it. To the degree they think they're helping the state, they should go buy a lottery ticket instead because the lottery is much more profitable for us," said Sickles.
Of the money the state gets in taxes, 2.5% goes to a fund to fight problem gambling and the rest goes to the state's General Fund, which helps fund things like education, public safety and health services.
Before sports gambling was legalized, a report from the Joint Legislative Audit and Review Commission estimated it could bring in $55 million a year one day for the state once sports betting at casinos also went online. Between January 2021 and January 2022, it brought in $23 million.
"The taxes that are being paid on it - they're not a lot, but they do help with the important things that state government spends money on," said Sickles.
Still, industry watchers say there's plenty to bet on with the future of the industry.
"Virginia is a success story," said Larry Henry, a senior reporter atGambling.com, a website that helps people understand what's legal in their states and helps break industry news.
Henry says these mobile betting companies have helped bring an industry that once operated in the shadows into the mainstream.
"It's a heavily regulated industry now. It puts everything out into the open. It's a form of entertainment for a lot of people," said Henry.