The Vermont House of Representatives on Friday passed a widely-anticipated bill that would legalize online sports betting in the state — and set aside some of the revenue to mitigate the sharp rise in problem gambling that officials expect would follow suit. 

Lawmakers agreed to a series of amendments to the bill, H.127, late Thursday evening and gave it final approval on Friday. The bill passed nearly unanimously.

Under the amended bill, Vermont would take at least 20% of the adjusted gross revenue that sports betting operators — such as DraftKings and FanDuel — make in the state each year. 

The state also would charge each company an annual operating fee that varies based on how many other companies are in the market here. If Vermont contracts with one operator, it would charge $550,000. But if there are six — the maximum allowed under the bill — each one 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 2024 fiscal year budget estimated that the state would 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 committees — the state could expect to bring in just $2 million.

Rep. Diane Lanpher, 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 get settled out over the first five years — until we can get a handle on what we think the revenue could be, consistently,” she said. 

The Joint Fiscal Office also estimated that sports betting revenue would increase to at least $4.6 million in the 2025 fiscal year, and could be as high as $10.6 million. 

House lawmakers agreed Thursday to create a “sports wagering fund” to hold the revenue and fees that the state Department of Liquor and Lottery would collect in its role overseeing sports betting in Vermont. The department already uses similar pools, known as enterprise funds, to operate liquor control measures and the state lottery.

In the 2024 fiscal year, the state would allocate $250,000 from the wagering fund to the Department of Mental Health to stand up programs addressing gambling problems, and twice as much money in the following fiscal year, according to the amended bill.

The House also adopted an amendment proposed by Rep. Matt Birong, a Vergennes Democrat and the bill’s lead sponsor, that toughens the penalties the state would levy on people and companies who violate the state’s online sports betting rules. 

The state would fine sports betting operators up to $25,000 for a first violation; $75,000 for a second violation; and $150,000 for a third violation. Officials could also terminate a company’s license to operate here if they violate the new statutes. 

“After taking testimony on how other states’ fine structures weren’t sufficient to deter nefarious behavior that is seen as a cost of doing business to some folks, I felt like we needed to escalate (the penalties),” Birong said in an interview Thursday.

The amended bill also includes a last-minute provision out of the House Committee on Ways and Means requiring that the state negotiate a limit on the amount of money both it and sports betting operators could spend on advertisements for wagering platforms.

The committee was responding to concerns about Vermonters being saturated by advertisements for sports betting companies — a trend that’s been widely reported in other states.

Wendy Knight, the liquor and lottery commissioner, told the House Appropriations Committee Monday that she thought the measure was “unnecessary,” since the bill already requires betting companies to submit an advertising plan to the state. 

House lawmakers essentially ran out of time before the crossover deadline Friday to debate the advertising cap language further, Birong said, so they decided to leave it in the bill for consideration in the state Senate — the bill’s next stop.