Virginia: A portal into cyberspace for gaming By Ken Adams, CDC Gaming Reports May 23, 2021 at 7:45 pm Virginia is in the midst of a major expansion of gaming. The Commonwealth authorized a lottery in 1987; in 2020, the lottery generated $1.3 billion in wagers and $350 million in revenue for the state. The 2020 revenue was up 37 percent over 2019, according to the Richmond Times-Dispatch, due to online betting in 2020. In 1997, horse racing was authorized and Colonial Downs opened, offering both harness and thoroughbred racing. Racing was not as successful as the lottery and the track discontinued live events in 2013. In 2018, historical horse racing machines (HHR) were legalized, the track was sold, and live racing commenced again in August 2019 with HHRs. The HHRs appear to have saved live racing. Last March, there were 2,100 HHRs at Colonial Downs and five Rose’s Gaming Emporiums scattered around the state. For the month, the HHRs generated $20.9 million in gaming revenue for the owner, Peninsula Pacific Entertainment, and $2.9 million for the state. In 2020, the Virginia Legislature passed legislation permitting sports wagering. The law authorized 12 licenses to be awarded by the Lottery. The law allowed for both retail and online or mobile betting. No retail books have been opened yet, but mobile betting is underway. In March, the seven licensed sport betting operators took over $300 million in wagers with $26.5 million in revenue and $1.5 million in taxes. Casinos were the final piece of the expansion puzzle. The legislature authorized up to five casinos licenses, one each in Bristol, Danville, Norfolk, Portsmouth, and Richmond. To be eligible, each city had to hold a referendum and approve a casino. In November 2020, the voters in Bristol, Danville, Norfolk, and Portsmouth gave their approval. Those cities have chosen operators: Hard Rock in Bristol, Caesars in Danville, the Pamunkey Indian Tribe in Norfolk, and Rush Street Gaming in Portsmouth. The Danville Caesars does not expect to open its $400 million casino before 2023. The project is still in the design and permitting stage. But the company giving Danville $15 million upfront; the mayor, in presenting the city’s budget for the next fiscal year, said no taxes increase are necessary because of it. The Caesars payment is making the city feel bullet proof and entitled. Caesars has promised a world-class resort and tourist magnet. It will be designed by the same architect who designed the $1.6 billion Bellagio in Las Vegas. Richmond will hold a referendum in November 2021. The city needed extra time; with the other cities signing deals and making plans, Richmond has been in the process of selecting an operator. Initially, six companies expressed interest and presented plans: One Casino + Resort, Pamunkey Indian Tribe, Poarch Band of Creek Indians, Cordish Cos, Bally’s and Golden Nugget. The plans ranged from $400 million to $650 million. The Resort Casino Evaluation Panel was created to evaluate the proposals. The panel was to forward one proposal to the city for final approval before the referendum. The panel took its time, eliminating one or two at a time until it was down to the final two — Cordish and One Casino. In the end, One Casino was recommended by the panel. Now, the City Council has to approve the recommendation. If that happens, the voters will give the project a thumbs up or down in November. It is not certain that the voters will approve; the local media reported that the opposition of residents in the vicinity of the proposed project caused the rejection of the Cordish project. One Casino will be the first casino developed by the entity. It is composed of two separate companies, Urban One and Peninsula Pacific Entertainment. Urban One is a media company and Peninsula Pacific is a small casino-operating company. It operates the Hard Rock Casino in Sioux City, Iowa; Colonial Downs Racetrack in New Kent, Virginia; Rosie’s Gaming Emporiums in Dumfries, Hampton, New Kent, Richmond, and Vinton, Virginia; and del Lago Resort in Waterloo, New York. The expansion in Virginia is a story of the era. Two things are different in Virginia than jurisdictions that have added casino gaming in recent years — Maryland, Massachusetts, and Ohio for example. First, sports betting is no longer illegal under federal law; 21 states have legal and operating sports betting, with several more likely to legalize it in the next year or two and more than $4.6 billion was wagered legally in March. The second difference is mobile or online gaming. Prior to the legalization of sports betting, online gambling was almost non-existent and most observers saw little chance for that to change. However, sports betting acted as an entry portal for online gambling. States with mobile sports betting have netted five or ten times more than states with only retail sports betting. The lesson was clear. Additionally, mobile sports betting showed remote gambling could be regulated and taxed. In New Jersey, Pennsylvania, and Michigan, mobile sports betting and remote gambling are already significant revenue generators. The shift from mobile sports betting to other remote gambling is proving to be an easy one. Virginia is in position to take advantage of that shift. In just the third month of sports, the handle in Virginia was the fifth highest in the country and without a single retail outlet. The casinos will probably not be operational before 2023, but once they are up and running, the possibility of other forms of online gambling will increase. The attitudes and prejudices that inhibited online gambling in other states in the past do not exist in Virginia. Thus, sports betting is opening a portal in cyberspace that gambling in Virginia is likely to use, just as Pennsylvania, Michigan, and New Jersey have done. It is a phenomenon of our times.