Following the recent receipt of the Virginia Joint Legislative Audit and Review Committee’s report on Gaming in the Commonwealth, state Senate Majority Leader Tommy Norment has suggested Portsmouth and Norfolk—both located in Hampton Roads—consider jointly developing a single resort-style casino.
Norment said, “I don’t know why they wouldn’t talk about revenue sharing, they’re going to be competing against each other on each side of the Elizabeth River.”
Both cities have been promoting their own casino proposals for nearly a year. Originally, the cities’ venues would have been across from each other on the Elizabeth River; recently Portsmouth considered development at an inland site.
However, gaming bill sponsor state Senator Louise Lucas of Portsmouth said, “We’re going to have our casino, and that’s it! End of the conversation. I have been working on this for 20 some years. Not going to quit now.”
Lucas’ original bill did not include Norfolk as a casino host city. She said Portsmouth needs the economic benefits because of its high unemployment rate and tax-exempt land. “Now if the localities decide they want to share revenue, then that’s on them, but that’s not the way I had envisioned it. I just want us to get a shovel in the ground first. That’s my goal,” Lucas said.
The Pamunkey Indian Tribe is considering a casino resort development in Norfolk. Mayor Kenny Alexander stated, “I think the process is very early—again, this is a process. Remember, I made it very clear from day one that the size and scope of this project will be determined by General Assembly actions, the market and the Bureau of Indian Affairs.”
Alexander noted the Pamunkey casino figures have decreased, from a $700 million investment to $200 million and from 3,500 jobs to 1,000.
The report found if casinos in Portsmouth and Norfolk are taxed at 27 percent, they could generate a total $95 million annually in state gaming tax revenues. Taxed at 40 percent, like Maryland and Delaware, the joint committee found the two cities would have to scale back their proposals.
The report said, “At a 40 percent gaming tax rate, each casino property would be expected to barely meet the $200 million required capital investment. Casinos would need to reduce costs, such as employing fewer workers, to maintain the profitability required.”
Under the proposed legislation, Bristol, Danville, Portsmouth, Norfolk, and Richmond would be allowed to develop casinos following successful voter referendums would be held in each city.
Virginia Lottery officials have expressed concerns that new casinos possibly could cannibalize lottery revenue, which hit a record $2.29 billion in sales in the last fiscal year. But lottery officials are more concerned about so-called unregulated “gray” or “skill machines.” Operators claim the games require skill involved, which makes them legal. The state leaves it up to local governments to determine if the machines are legal or not.
Last March, there were 500 of the machines in operation around Virginia—today there are more than 6,000. Officials estimate by next June, the machines could cost the lottery $140 million in sales. Virginia Lottery Executive Director Kevin Hall said, “It’s keeping me awake at night. It is not right. They are allowed to operate without any oversight, any regulation, any rules of the road, with no tax benefits to the locality or to the state.”
Hall recently made a presentation to lawmakers about the gray machines, indicating the Virginia Lottery is losing tens of millions of dollars due to the games. “Our sales are cut by $140 million in this fiscal year that ends June 30, 2020. That means almost $40 million less profit that would go to K-12 schools. I am not going to be producing that level of support for local schools in the coming year because of these gray machines.”
The most popular gray machines are the “Qs,” owned and operated by Queen of Virginia Skill & Entertainment. Spokesman Joel Rubin said he wants his skill games regulated. “Legal skill games like ours need to be regulated. Tax them and enforce it to keep out the guys who don’t have skill games. We have skill games,” he stated.
State Senator Lucas commented, “Look, I don’t want the gray machines in Virginia interfering with my casino. Bottom line. End of subject.”
