Virginia Resort Casino Critics Warn of Pitfalls After Release of Encouraging Study

Posted on: December 1, 2019, 09:10h. 

Last updated on: December 1, 2019, 11:23h.

Ed Silverstein @casinoorgedsilv Read More
Expertise: Legal, Tribal Gaming.

Virginia appears divided on expanded legalized gaming following a recent far-reaching study which predicts proposed gambling venues to have “a positive, but modest, economic impact on local economies.”

Virginia Joint Legislative Audit and Review Commission Chair Sen. Thomas K. Norment, Jr., led the commission which studied gambling expansion in the state. (Image: Richmond Times-Dispatch)

“Gaming in the Commonwealth 2019”, compiled by the Joint Legislative Audit and Review Commission, said resort casinos are viable in five cities: Bristol, Danville, Norfolk, Portsmouth, and Richmond, citing findings from The Innovation Group, a national consultant.

The five properties in total are projected to earn about $970 million in yearly net gaming revenue, the study says. The five Virginia casinos would also generate about $260 million a year in state gaming taxes, the study adds.

That total assumes the tax rate would be set at 27 percent, which represents the national median.

Each of the Virginia casinos would hire at least 1,000 employees to staff a venue. The median wage is estimated to be $33,000 a year. Close to half of the jobs were described as “low-skill and low-wage,” the report said.

Sports betting and online gaming would lead to less of an economic or fiscal benefit to the state, the report said. Wagering on athletic events could lead to as much as $55 million in yearly gaming tax revenue. Online casino gaming could lead to about $84 million a year.

Opening a brick and mortar casino in northern Virginia would increase statewide gaming tax revenue by an estimated additional $155 million, and it would employ an additional 3,200 workers, the study said.

Analyzing the northern Virginia location was not authorized in the approved legislation, SB 1126. But it was reviewed in the study.

About one-third of casino revenue will be generated by out-of-state players, the report projects. Proposed Danville and Bristol casinos will most heavily rely on out-of-state residents because of their small local markets. The report also cautioned that if casinos were developed in North Carolina and Tennessee, Danville and Bristol would be vulnerable from the competition.

Limited Gaming Currently Allowed in Virginia

The Virginia lottery now generates over $600 million a year after prizes are paid to winners. Apart from the lottery, gaming for charitable causes and betting on historical horse races are the only forms of gambling allowed in Virginia.

Residents now bet over $1 billion a year on the three categories. That leads to approximately $700 million in revenue for state programs, such as for public schools.

Five new brick and mortar casinos could hurt existing hor,se racing and, to a lesser degree, other allowed gambling, the study said. Another drawback is that 5 to 10 percent of adults may be at risk for gambling problems if the new casinos are opened, the report adds.

The report calls for a competitive selection process by which to select which owners/operators will be chosen for the casinos.

Reaction Mixed to Gambling Study

Following the release of the study, Dr. Gary Miller, a Danville City Council member, told WDBJ, “I’m very encouraged. They’re keeping Danville in the limelight as one of the cities…. I think this just strengthens what we need to do.”

Yet the Family Foundation of Virginia warned in a blog post, “that over the long run, casinos will lose their luster, with the occasional visitor who will find other entertainment venues, leaving the casinos to rely solely on the misfortune of the local population, and ultimately to go back to the legislature for a bailout.”

Also, the foundation points out most of the new jobs created by the casinos would be low wage. Additionally, “absent from the study was any worthwhile consideration of the impact of expanded gaming on existing local businesses and restaurants, or its contribution to increases in criminal activity, sex trafficking, and substance abuse in those regions.”

Other criticism comes from Colonial Downs, which owns a racetrack in New Kent, and four Rosie’s Gaming Emporiums, according to the Richmond Times-Dispatch. Colonial Downs is predicted to see a 45 percent drop from almost $300 million a year in revenue from historical horse-racing gaming parlors, the newspaper said.

Colonial Downs is also planning to expand its operations, the newspaper report adds. Danville and Dumfries residents last month approved allowing gaming parlors in their communities.

The Pamunkey Indians also expressed concerns. The tribe wants to build a planned $700 million casino if they acquire land in Norfolk.

“The Pamunkey Tribe has been marginalized for centuries and deserve some protections as they seek to gain financial independence and improve the lives of their members,” tribal spokesman Jay Smith told the Times-Dispatch. He said recommendations in the study “do not sufficiently protect Virginia’s only tribe with federal gaming rights.”

The General Assembly will revisit the gambling issue during the 2020 legislative session. Individual cities will also hold local referendums on whether to allow casinos.