Former Virginia regulator critiques ADW growth and regulatory impact on horse racing

During a recent Senate Finance Committee meeting on April 16, 2025, discussions centered on the challenges facing advanced deposit wagering (ADW) in Virginia, as highlighted by a former regulator with extensive experience in the field. The testimony underscored the stagnation of ADW growth in the state, which has seen only modest increases over the past two decades compared to national trends.

The former regulator, who managed racetracks and served on the Virginia Racing Commission, pointed out that while Virginia initially had four major ADW providers, the growth rate was only about 20% annually for eight years. This slow growth was largely attributed to racetrack operators marketing their own ADW systems to existing customers, which led to a decline in traditional racetrack operations.

A significant turning point occurred in 2014 when Colonial Downs, the sole racetrack licensee, suspended live racing due to a dispute, leaving ADW as the only wagering option for Virginia residents. Despite this opportunity, the amount wagered through ADW did not increase, highlighting a persistent issue in the state's regulatory framework.

The COVID-19 pandemic briefly boosted ADW wagering as residents sought entertainment at home, but this increase was short-lived, with a subsequent 20% decline noted. The former regulator attributed the lack of sustained growth to high required payments to the state and various funds, totaling 11.5%, which he argued deterred ADW providers from investing in Virginia.

He emphasized that many ADW operators focus their marketing efforts in states with more favorable financial conditions, leaving Virginia at a disadvantage. The absence of advertising for ADW in the state further compounds the issue, as potential customers remain unaware of available options.

Reflecting on his 30-year career in horse racing, the former regulator expressed regret that he could not amend the existing ADW regulations, which he believes have hindered the growth of the industry in Virginia. He suggested that a more competitive payment structure could have significantly benefited the state's racing and breeding sectors over the years.

The discussions in the Senate Finance Committee highlight the need for a reevaluation of Virginia's ADW regulations to foster growth and ensure the sustainability of the horse racing industry in the state. As stakeholders consider potential reforms, the implications for both the economy and the local equine community remain significant.