In the space of two weeks, a Virginia Senate Finance and Appropriations committee slapped down a bid to approve a casino referendum in Petersburg by a vote of 8-7 on February 2. And this after passing two prior committees. And a House of Delegates voted February 7 to permit the same referendum.
Go figure.
It’s not a done deal, though. The full Senate gets to vote on it, and if you’re a betting person bet against approval. Petersburg bill will not pass the Senate, according to the Progress-Index. If It fails you could blame a requirement that the casino operator pays its workers the average prevailing wage.
All this must drive Senator Joe Morrissey out of his mind. Morrisey, the driving force to get the Petersburg vote approved, picked up the mantra after Richmond voters turned down the opportunity by 1,493 votes.
“Petersburg was much more of a natural fit,” Morrissey said in a November 2022 interview with Virginia Business. “The casino legislation was to help struggling cities in the commonwealth, not counties or cities that were going gangbusters. You had to work to construct language that allowed Richmond to fit into one of the five host cities.”
Del. Kim Taylor sponsored HB 1373, which passed 49-44 in the full House vote. The bill also bars a do-over from Richmond until Petersburg gets Its chance to vote. Taylor said Petersburg needs a casino. Petersburg has come close to bankruptcy in recent years. She noted that the average annual income in Petersburg is about $26,000, while jobs at a proposed casino would be in the $60,000-per-year range.
Taylor said on the House floor Tuesday that the measure, which would prevent Richmond from holding another casino referendum until Petersburg residents have had a chance to vote, would mean “economic independence” for Petersburg, which has come close to bankruptcy in recent years. She noted that the average annual income in Petersburg is about $26,000, while jobs at a proposed casino would be in the $60,000-per-year range.
“This bill is about raising the per capita income in my city,” she said.
Petersburg City Council members signed a commitment with Baltimore-based commercial real estate and gaming company The Cordish Cos. in October 2022 to develop a Live! Casino & Hotel resort should the vote go forward. pending passage of state legislation and Petersburg voters’ support of a casino referendum this fall. Cordish agreed to a $1.4 billion to build a casino, hotel and parking garage, In addition to a multiuse development on the surrounding 90 acres, producing 1,800 direct jobs. However, Maryland-based Cordish, which has developed casinos across the mid-Atlantic and Florida, said it is not interested in developing a casino if Petersburg and Richmond both received a legislative green light to build casinos.
Sickles also said that Taylor’s bill’s passage in the Senate is “questionable,” given the defeat of Morrissey’s bill, but he said he would support the measure to keep the possibility of a Petersburg referendum alive.
However, the bill will only pave the way for a casino vote; it won’t legalize a Petersburg casino. That will be the voters’ responsibility during the next election cycle.
It’s common for state lawmakers to propose companion bills in the House and Senate. That happened in Virginia. Just last week, a companion bill to the House’s Petersburg referendum failed in a Senate committee meeting.
And because of that, it’s believed the bill will die once the Senate votes on it. Local media noted that the reason the Senate bill may have failed is that it included a requirement that the casino operator pays its workers the average prevailing wage.
However, if the bill were to pass and get t signature, it could be a huge win for Petersburg. The city hired Maryland-based Cordish Companies to build a $1.4 billion multi-use development that would be home to the Virginia casino.
Virginia casino in Petersburg wouldn’t end Richmond’s hopes the House vote likely has pro-casino Richmond city leaders and developers holding their breath. Petersburg is located just 25 minutes south of Richmond.
If the southern neighbor gets its casino, a future Richmond casino would likely lose a good chunk of revenue. And with that in mind, it may be much harder to pitch a Virginia casino to developers and voters next time around.
According to the state Department of Planning and Budget, the proposed legislation would not have an impact on state spending, but additional Virginia Lottery and Petersburg staffing and operational spending would be necessary.
Most opponents come from Richmond. Most supporters from Petersburg.
Petersburg signed a commitment with The Cordish Cos. in October 2022 for a Live! Casino & Hotel resort, pending passage of Morrissey’s and Taylor’s bills and a successful referendum.
“We will continue to work with local leaders and members of the General Assembly to bring a transformative urban revitalization project to Petersburg that will generate desperately needed new jobs for Petersburg, along with substantial additional tax revenue for the city and commonwealth,” Zed Smith, Cordish’s chief operating officer, said in a statement.
“Petersburg was much more of a natural fit,” Morrissey said in a November 2022 interview with Virginia Business. “The casino legislation was to help struggling cities in the commonwealth, not counties or cities that were going gangbusters. You had to work to construct language that allowed Richmond to fit into one of the five host cities.”
While the legislature dickers with Petersburg and Richmond for a casino development and sports betting takes hold, and so called skill games proliferate and historic racing machines flourish, And don’t forget bingo.
Some lawmakers think the time has come to create a gambling commission.
Right now gambling is overseen by a racing commission, some by the department of Agriculture or Virginia Lottery.
“Gambling operations are places where people launder money,” Senator John Bell told WVTF. “So, we need to have protections that would come with this, and I think we’re entering this like it or not in a big way and in a few years, it’s going to be a gigantic industry in Virginia, and we need to prepare for it now.”
The Gambling Commission should be a cabinet-level secretary position to oversee this entire industry from glittery casino to convenience store skill games, Bell said.
Delegate Paul Krizek wants to study the issue to ascertain what kind of system works best.
“It could still very well be lottery that takes on that role, or it could be a new entity altogether.”
Virginia isn’t just faced with the development of mega casinos and sports betting. There are the so-called skill games present in gas stations, truck stops and bars. They look like slot machines, they play like slot machines, but its proponents insist there is a skill component, so they don’t need to be regulated like games of chance.
House Majority Leader Terry Kilgore doesn’t buy it. He introduced a bill to legalize and tax these games. It failed to even garner a hearing.
“It’s dead through the legislative process,” Kilgore told the Associated Press. Kilgore introduced legislation to legalize and tax electronic games at gas stations and bars. He failed to get a hearing and declared it dead for the session. He struggled to get other lawmakers on board while the matter of the machines is currently before a court in a pending lawsuit.
The state tried to ban the games in 2020. But skill-game operators got a one-year reprieve.
In December 2021, a Virginia judge issued an injunction blocking the ban and allowing the games to continue operating. The judge has declined to dismiss the lawsuit, and it could go to trial later this year.
Proponents say the games help small businesses that host them and enjoy a share of the income, and if fully regulated and taxed would add to the state coffers. They also claim illegal untaxed games have flooded the market with no skill element.
Mike Barley, chief public affairs officer for skill-games developer Pace-O-Matic, said in a statement provided to the AP that the company “will continue to vocalize our support for the regulation and taxation of skill games and remain committed to doing all we can to end illegal gaming across the state.”
Casinos and other opponents, charge that these games fueled problem gambling with no benefit to the state.
But State Sen. Bill Stanley, an attorney for Hermie Sadler’s truck stop and gas station company says the casinos want a monopoly.
“I think if we put a tax and regulatory scheme together, what you’ll see is, it will be very clear to our police officers and our commonwealth’s attorneys, what games are legal and what games aren’t. And you’ll see those illegal video game terminals, those illegal games of chance—slot machines—go away,” he said.
Kilgore said his bill would to allow a limited number of regulated games at convenience stores but no more “skill game rooms” that have proliferated around the state. “It would have gotten rid of all those. And we’re going to do that, but it’s going to take some time,” he said.
Kilgore’s bill would have put limits on the number of skill-game machines, created a taxation structure with some revenue directed toward law enforcement efforts to combat illegal gambling.
While the legislature figures out what to do with Petersburg and what to do with the so-called skill games, lawmakers play around with the promotional deductions. Operators like them because it gets subtracted from the taxes owed to the state. The state doesn’t like them for the same reason.
A House bill would lower the deduction percentage 0.25 percentage points each year until it reached 1.75 percent in July 2026, according to Legal Sports Report.
An amended bill only allows promotional deductions of 1.75 percent of total monthly handle once those first 12 months are up.
If all operators could deduct promotional costs equal to 1.75 percent of their handle as amended, the $518.8 million bet in November would mean nearly $9.1 million could be deducted from taxable revenue. In reality, only $817,857 was deducted. That remaining $8.3 million equals $1.2 million in tax dollars at Virginia’s 15 percent tax rate.
Krizek voted in support of the bill, but with a caveat that it does not hurt the problem gambling program. Sports betting contributes the highest percentage to the problem gambling fund out of any gambling in the state at 2.5 percent, he said.
“My understanding is had we not had that, we would have run out of money before the end of last year,” Krizek said. “So that is really critical. I’m going to support this to send it up to appropriations because I want to see what the fiscal impact is but that’s my concern, that we have enough money for the problem gambling fund.”
