Lottery should oversee all gaming in Virginia
$5,000 Welcome Bonus
RICHMOND — A new study recommends the Virginia Lottery oversee all gaming in the commonwealth, including historic horse racing and charitable gaming.
Members of the Joint Legislative Audit and Review Commission heard a staff presentation in Richmond regarding gaming in Virginia and a recommendation to consolidate gaming regulation. Currently, three state agencies regulate gaming. The lottery regulates lottery games, casinos and sports betting, the Virginia Department of Agriculture and Consumer Services regulates charitable gaming and the Virginia Racing Commission regulates live horse racing wagering and electronic historical horse racing games.
After evaluating each agency, the staff reported the lottery was best positioned to assume oversight of the other forms. It determined neither VRC nor VDACS have adequate staffing or expertise to regulate the gaming they are charged with overseeing.
“Establishing a single state gaming agency would facilitate effective and efficient regulation across all gaming formats and Virginia Lottery is best suited to serve in this role,” according to the study.
Wagering in Virginia has tripled since 2018, climbing from $3.4 billion to $9.58 billion before the Bristol Casino, future home of Hard Rock, even opened. The increase is directly tied to historic horse racing facilities opening in 2019, internet lottery sales in 2020 and online sports wagering in 2021.
By 2025, when all four approved casinos have operated for one year, that total is expected to reach $21 billion.
Monday's presentation also included considerable discussion about the similarities of the four forms of electronic gaming presently available. To the consumer, there is little difference between the 870 slot machines in the Bristol Casino, 2,600 historic horse racing games deployed statewide, 3,300 electric pull tab machines and the estimated 9,000 “gray” machines of “skills” games.
Historic horse race games, available at Rosie’s Gaming Emporiums and at Colonial Downs, account for $3.2 billion in wagering, according to the report. That amounts to 95% of total wagering on horse racing in Virginia. There are currently six historic horse racing locations with two more under construction — which will deploy another 1,350 machines — according to the report.
A portion of historic horse racing revenues are distributed annually to support the equine racing industry in Virginia.
The study further recommends the same licensing standards applied to casinos should apply to historic horse racing operators including key executives, suppliers and employees, which isn’t currently done.
At present, historic horse racing gaming operations and security managers aren’t required to submit personal and financial information, insufficient information is required of for key executives and equipment suppliers to be licensed, that information isn’t presently verified by the Virginia Racing Commission and historic horse racing facilities are not required to meet any “pre-opening requirements” to be licensed, according to the report.
Gray machines, which are virtually identical to slot machines in appearance and operation, remain unregulated and untaxed. The General Assembly voted to prohibit the machines, then approved a one-year delay. That process is now on hold due to a court’s temporary injunction that allows the machines to continue operating.
In 2021 the state estimated there were 9,000 such machines and wagering was $2.2 billion, with more than $500 million in estimated net gaming revenue. The report also estimates the number of machines could reach 19,000 if they remain unregulated.
If the gray machines were approved, the state could regulate the numbers in each location and statewide, types of businesses that can host them and types of prizes the machines offer, the report found.
In a separate report, the staff and external consultants the Innovation Group determined there is sufficient demand to support a casino in the Petersburg area should the General Assembly modify legislation to allow that city to host a referendum.
A Petersburg casino could even succeed if the city of Richmond were to hold another referendum and also approve casino construction there, according to the report. The two cities are about 25 miles apart.
The temporary Bristol Casino opened in July, about two years in advance of the full Hard Rock Hotel & Casino while the Portsmouth casino is expected to open next year with Norfolk and Danville forecast to open in 2024.
By 2028 the four are forecast to generate a combined $828 million annually in net gaming revenue. Danville is forecast to generate $256 million, Norfolk $226 million, Portsmouth $199 million and Bristol $147 million — although the temporary Bristol Casino is already on pace to exceed that estimate in its first year, based on its first three months of operation.
If either Petersburg or Richmond — or both — are approved, the earliest a casino there is likely to open is 2027, according to the report. Petersburg is forecast to generate $204 million in annual net gaming revenue. If both are built, Richmond is forecast to generate $249 million and greatly impact Petersburg, which is forecast to drop to $140 million per year in net gaming revenue.
Either or both are also expected to impact revenues from casinos in Danville, Norfolk and Portsmouth but with “no material impact” — estimated at $2 million to $3 million annually — on the Bristol casino, according to the report.
