11 VAC 5-70-50.  Sports Betting Permit Applications.

Subdivision (8) of Subsection (B) of this section requires sports betting permit applicants to provide information on whether the applicant intends to offer its sports betting platform in physical locations within the Commonwealth of Virginia.  However, § 58.1-4034(G)(2) of the Code of Virginia provides that permit holders are prohibited from “cooperatively marketing its sports betting platform with any business issued a license pursuant to the provisions of Title 4.1.”  As Title 4.1 provides for the licensure of all establishments authorized to sell alcoholic beverages, the statute drastically impacts the ability of permit holders to offer their sports betting platforms in physical locations.  It is unclear if this provision anticipates that the Lottery will approve permit holders offering sports betting platforms in physical locations, so long as such locations are not licensed pursuant to Title 4.1 of the Code, or if this provision is strictly limited to those entities who are exempted from the “cooperative marketing” prohibition under § 58.1-4034(G)(2) of the Code.

An additional concern on this issue is that there is no definition in statute for “cooperative marketing” in the statute, and an overbroad interpretation could prevent permit holders from even purchasing advertisements at sports venues and engaging in traditional marketing campaigns that are targeted at connecting with sports fans.  Other states have looked to prevent the proliferation of “mini sportsbooks” or “sweepstakes cafes” by adopting a prohibition on the provision of sports betting devices in places of public accommodation. Virginia should provide a definition of “cooperative marketing” in line with the above which would address the concern about the proliferation while still allowing permit holders to engage in the traditional marketing efforts that have shown to be successful in other states.

To address the concerns raised above, we suggest the following changes to 11 VAC 5-70-50(B)(8):

“8.  Whether the applicant intends to engage in cooperative marketing, defined as offering its sports betting platform in physical locations within the Commonwealth of Virginia, if authorized pursuant to § 58.1-4034(G)(2) of the Code of Virginia, or to participate only in an online environment;”