Virginia casino bills move forward

Tuesday 18th February 2020

In Virginia last week, both the House and Senate passed versions of a bill that would allow for casino gambling in the state, but if those bills are enacted as currently drafted the Eastern Band of Cherokee Indians will be out of luck on its plan to build a casino near Bristol.

The House version, introduced by Republican Delegate Barry D. Knight of District 81 in Virginia Beach, passed on Feb. 11 with a vote of 61-33 and is now in the Senate Committee on General Laws and Technology. The Senate version -- introduced by Democratic Senator L. Louise Lucas of District 18 in southeastern Virginia -- also passed on Feb. 11, with a similarly proportioned vote of 29-11. It is now in the House Committee on General Laws.

The bills have some significant differences, perhaps most notably the disparity in tax rates. The House version would tax casino revenues at 15 to 28 percent, depending on total adjusted gross receipts, while the Senate version proposes a much larger tax obligation, with a range of 27 to 40 percent. By contrast, the EBCI is currently required to give the state 5 percent of its revenue from live table games, with that cut eventually inching up to 8 percent by 2032. However, the tribe's status as a sovereign nation puts strict legal limits on the state's ability to generate revenue from casinos on federal trust land; the Virginia venture would be a commercial project operating outside the Indian Gaming Regulatory Act, so those limits would not apply.

Despite differences, the bills also contain many similar provisions -- including parameters that would allow casinos to be built only within five specific cities selected using parameters such as unemployment, population and poverty rates. Those cities are Bristol, Danville, Norfolk, Portsmouth and Richmond.

That stipulation could spell trouble for the proposed Cherokee development, which would occur on 350 acres along Interstate 81 adjacent to The Pinnacle retail complex, located near but not within the city of Bristol. The location would not qualify as a possible casino site under the current bill language.

"If the final bill signed by the governor is limited to those jurisdictional lines, the project with Cherokee you're looking at is not in those jurisdictional lines," said Greg Habeeb, a lobbyist representing the EBCI in this matter.

The legislative session, which began Jan. 8, lasts 60 days. Afterward, the governor has six weeks to amend the passed bills that land on his desk, and from there the legislature reconvenes to decide what to do about the governor's amendments. Habeeb is hopeful that situation will change before all is said and done.

"In addition to casinos, the General Assembly is debating sports betting, they're debating tabletop poker machines, they're debating skill games -- there's a ton of gaming and gambling debates going on, so they're all connected," he said. "This stuff has been going all over the place for the last three to four weeks, and I expect it to keep going all over the place until April when the governor finishes his work."

A former member of the legislative body -- he represented District 8 as a Republican in the Virginia House of Delegates from 2011 to 2018 -- Habeeb is now a partner at Gentry Locke Attorneys with significant insight into the workings of state government. For the most part, he said, the bills follow the recommendations of a November report issued by the Joint Legislative Review & Audit Commission. That report was completed in response to a 2019 law directing that such a report be produced. The law laid out parameters for allowing casino gambling in the state but included a clause that said the law would not become effective unless re-enacted in the 2020 session.

While both the House and Senate bills passed last week generally follow JLARC's recommendations, there are two major exceptions to that rule, said Habeeb.

First, JLARC recommended that casino licenses should be awarded using a competitive process in which all projects are put on the table and the best ones chosen. Secondly, the report recommended that a committee evaluate and select proposals to operate and develop any authorized casinos. Neither bill incorporates either recommendation.

It would be "inconceivable" for the state to reject those recommendations, Habeeb said.

Principal Chief Richard Sneed and The Pinnacle developer Steve Johnson announced their plan to build a "major casino resort" on the tract Jan. 7, stating that in addition to gaming the development would offer a variety of entertainment options, including an outdoor concert venue, recreational facilities and a hotel with an indoor water park.

But it's not the only proposal on the table for the Bristol area. Hard Rock International declared plans for a casino within Bristol city limits in 2018. While Habeeb characterizes that project as a "small casino at a mall site" -- unlike the "bigger, multifaceted development" the Cherokee want to build -- the folks behind the Hard Rock project beg to differ. In an open letter posted Jan. 24, developers Jim McGlothlin and Clyde Stacy described their project as a "family-friendly venue" that would feature 600 hotel rooms as well as a large concert hall, criticizing the tribe as an "out-of-state casino owner" trying "at the eleventh hour" to protect its own interests. However, they wrote, it is "really doubtful at this point" that the Cherokee project will come to fruition.

Habeeb disagrees with that prediction.

"It's not surprising to me that it is where it is right now, because it started that way," he said of the legislation. "There is a lot of time for it to get done right."

The House bill can be tracked at lis.virginia.gov/cgi-bin/legp604.exe? 201+ful+HB4, and the Senate Bill can be tracked at lis.virginia.gov/ cgi-bin/legp604.exe?201+sum+SB36.

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