After gambling interests strike a deal in private, push begins for casino legalization bill

By: - February 5, 2020 11:59 am

The sun rises over the Virginia Capitol. (Ned Oliver/Virginia Mercury)

If anyone on the Virginia Senate’s gambling subcommittee found it odd that a casino lobbyist was explaining the ins and outs of a far-reaching casino legalization bill they were about to vote on, they didn’t say so publicly.

No one objected when Scott Johnson, a lobbyist for a Bristol casino development group whose PAC has donated more than $600,000 to politicians in both parties, was tapped to give the legislative presentation Tuesday morning on a newly rewritten casino bill with big implications for five cities. 

That meant it was left to Johnson to explain to the senators how the state will vet potential operators to make sure they’re reputable and financially sound, describing the regulatory scrutiny that might one day be applied to his client, Bristol Casino Resort LLC.

When Johnson was called upon again Tuesday evening to present the bill in a House of Delegates subcommittee, one delegate spoke up. Del. Chris Hurst, D-Montgomery, said he understands it’s not uncommon for lobbyists to explain bills they helped write. But on such a high-stakes issue, he said, it was hard to overlook.

“I just want it to be noted for the record that this is highly unusual,” Hurst said. After his comment, the subcommittee chose to hear from the bill’s patron, Del. Barry Knight, R-Virginia Beach, not Johnson. 

Nevertheless, the rollout of the compromise bill Tuesday indicates the General Assembly may be close to approving casinos after decades of failed attempts. Though the legislation has a long way to go, subcommittees in both chambers voted Tuesday to keep it moving after making significant changes to the deal worked out by gambling interests and the cities that want to host them.

‘Welded together at the hip’

The casino bill’s supporters have said the projects could bring much-needed jobs, economic activity and tax revenue to struggling areas that could use a chance to reinvent themselves. A much smaller group of skeptics has warned that casinos don’t always produce the economic miracles promised in the sales pitch and could have a negative impact on low-income communities and those who may become addicted to gambling.

If the legislation is approved, voters in Bristol, Danville, Portsmouth, Norfolk and Richmond could potentially be weighing in via ballot referendums this fall. If those voters give a thumbs up, Virginia’s first casinos could open their doors within the next few years.

First, legislators have to figure out who should have a shot at participating in the fledgling casino industry. 

Instead of opting for an open, competitive process for casino licenses, pro-casino lawmakers have worked with a coalition of gambling interests to carve up the state in private negotiations. That process produced a bill that lets local officials pick their own casino developers, with the implicit understanding they’re likely to choose the same would-be operators that have spent years pushing for the legislation.

“These five localities are welded together at the hip. We will not be separated,” said Sen. Louise Lucas, D-Portsmouth, the patron of the Senate bill. “In the agreement we decided that we would move forward together.”

In Bristol, the idea is being spearheaded by coal barons Jim McGlothlin and Clyde Stacy, who want to put a casino resort in an abandoned mall, a project strongly supported by city officials. A competing casino project the Eastern Band of Cherokee Indians has proposed in neighboring Washington County would get no consideration under the bill explained by the Bristol casino group’s lobbyist because, as drafted, casinos would only be allowed in the five targeted cities.

In the Hampton Roads area, Norfolk is working with the Pamunkey Indian Tribe on a riverfront casino near its minor-league baseball stadium. Portsmouth has partnered with Chicago-based Rush Street Gaming to create a casino-anchored entertainment district. 

Danville’s project is more uncertain, because the city is going through an open bidding process rather than announcing a deal with a pre-selected partner.

‘A huge departure’

The outlook for Richmond — where city officials have barely begun discussing casinos — is more complicated.

Under the bill presented Tuesday, Richmond would still get to pick its own casino operator, but it would only have two options: the Pamunkey tribe and Colonial Downs Group.

At the House hearing, Del. Jeff Bourne, D-Richmond, said the new casino bill “handcuffs Richmond.”

“Some people were engaged in this conversation to reach this point,” Bourne said. “Others of us, who represent areas where these casinos may go, were not.”

After a representative from Richmond Mayor Levar Stoney’s office said the city wants as much competition as possible, Del. Schuyler VanValkenburg, D-Henrico, amended the bill to remove any provision giving certain entities special rights to a Richmond casino.

Richmond was originally written into the casino bill as a fallback option for the Pamunkey tribe. But it’s become clear Colonial Downs, the owner of the New Kent County race track and several off-track gambling parlors, sees Richmond as an important piece of its turf.

Currently, Colonial Downs can operate up to 3,000 slots-like historical horse racing machines across the state. They’ve installed 700 in a former Kmart in South Richmond.

To protect Colonial Downs from the effects of gambling competition, the casino bill proposed authorizing up to 2,500 more machines. But the prospect of lots of those machines heading to Northern Virginia — possibly at a Colonial Downs facility planned for the town of Dumfries — seemed to alarm some Northern Virginia lawmakers.

Saying the bill could lead to a “super-sized” slots parlor in Dumfries, Sen. Jeremy McPike, D-Prince William, struck the Colonial Downs expansion from the Senate version of the legislation.

“This is a huge departure from the original bill,” McPike said.

‘Really important that we get this right’

It’s not clear if the compromise bill can be pieced back together in a way that will make all the gambling interests happy, but lawmakers are expected to continue hammering out the details as the session progresses.

Another point of contention is the issue of minority ownership, with some questioning why black investors aren’t getting special consideration similar to the Pamunkey tribe, which could potentially build two casinos under the proposal.

“It seems like every time we put on a major project, folk who look like me get left out of where the real money is” Del. Luke Torian, D-Prince William, asked at the House hearing.

Del. Barry Knight, R-Virginia Beach, the sponsor of the House version of the casino legalization bill, said he hopes the General Assembly can find a way to prioritize minority ownership.

As a sovereign nation recognized by the federal government, the Pamunkey tribe is the only group in Virginia that could pursue a casino regardless of what state lawmakers choose to do.

Alfred Liggins, the CEO of black-owned media company Urban One and an investor in Maryland’s MGM National Harbor casino resort, said MGM created a tiered investment system that gave minorities a chance at a bigger financial stake. But the apparent lack of a competitive licensing process in Virginia, he said, makes it difficult to build in preferences for minority owners.

“I think that we as black people consider ourselves indigenous populations as well,” Liggins said. “To not have the opportunity to participate in the value creation there and just actually be gamblers or workers is not what I think the spirit of fairness is about.”

Though lawmakers have already heard an earful from those with something to gain from the casino bill, Del. Lashrecse Aird, D-Petersburg, said Tuesday that there are other fiscally distressed places that “have a whole lot to lose.”

“I just want to give a word of caution that as we move forward on something of this magnitude that will forever change the commonwealth, it’s really important that we get this right,” Aird said.

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Graham Moomaw
Graham Moomaw

A veteran Virginia politics reporter, Graham grew up in Hillsville and Lynchburg, graduating from James Madison University and earning a master's degree in journalism from the University of Maryland. Before joining the Mercury in 2019, he spent six years at the Richmond Times-Dispatch, most of that time covering the governor's office, the General Assembly and state politics. He also covered city hall and politics at The Daily Progress in Charlottesville.