Results of the Nov. 7 referendum may shape the future of gambling resorts in the commonwealth
By Jimmy Cloutier
Virginia Center for Investigative Journalism at WHRO
Richmond city officials and out-of-state developers are promising more well-paid union jobs and new money for child care services to flip voters from “no” to “yes” in a second referendum on bringing casinos to Virginia’s capital.
City Councilwoman Reva Trammell applauds Urban One founder Cathy Hughes at a block party organized by casino developers, Richmond, Va., Sept. 30, 2023. Urban One and Churchill Downs are the developers behind the proposed casino in Virginia's state capital. Photo by Jimmy Cloutier/VCIJ
But the optimistic projections continue to be met with skepticism from staunch opponents and economists, as another Virginia casino struggles to launch and returns on similar developments across the country have produced mixed results.
The Nov. 7 referendum for Richmond voters will decide how – or if – the gambling industry will grow in the state.
Richmond voters remain deeply divided. A recent Founders Insight poll conducted between Sept. 21 and Sept. 24, found that 44% of likely voters supported building a casino, 44% opposed and 12% were unsure.
”We always have to think towards the future in terms of where the competition is,” said Robert McNab, director of the Dragas Center for Economic Analysis and Policy at Old Dominion University. “And the trend right now in Virginia and across the United States is to increase gambling alternatives, not decrease. So one might argue that physical casinos are going to only face increased competition over the coming years."
The General Assembly in 2020 passed legislation legalizing casino gambling in a bid to lift struggling economies. The issue was controversial in Richmond, where voters still hold doubts about the developers’ promises and the benefits of a casino to the local community.
This year, media conglomerate Urban One, and its new partner, Churchill Downs, the operator of the Kentucky Derby, are prepared to spend a record-breaking $8.1 million on the referendum campaign. Developers have blanketed TV, radio and social media with pro-casino ads, spent thousands of dollars on canvassing and organizing more than a dozen community events, often alongside labor union leaders and city officials.
Developers have also given heavily to Richmond City Council members and influential state lawmakers to win support for the proposed $562 million resort casino.
If the referendum fails again, city officials and developers warn that the fifth authorized casino will simply benefit another part of the state. Petersburg earlier this year tried to hold its own casino referendum, but Urban One successfully lobbied the General Assembly to block the move.
Citing a recent report from the Virginia Lottery, developers have emphasized that the casinos in Bristol, Danville and Portsmouth are exceeding expectations. But Norfolk, among the first cities to endorse casino development, has yet to even approve plans for a waterfront gaming district amid disputes with the developer.
Economists also caution that the gains could be short-lived.
While cities that host casinos typically experience an economic boost, gaming revenue tends to slow once the “novelty wears off,” said McNab. He pointed to Detroit, Michigan, which legalized commercial casinos in 1996. There, casino revenue peaked at $1.65 billion in 2006, then fell to a pre-pandemic low of $1.41 billion in 2019, according to analysis by the Dragas Center.
Adam Scavette, an economist at the Richmond Federal Reserve, said casinos need to attract large numbers of new visitors, or else the gaming venue will simply siphon money from existing businesses, limiting its economic impact.
"If the casino is just attracting the same people who are already going to concerts or restaurants," Scavette said, "You're not going to see that tax boost materialized."
The Richmond casino is being pitched as a destination resort. Due to competition from other casinos, only about 8% of gaming revenue is projected to come from visitors traveling more than an hour, according to a 2021 revenue assessment commissioned by Urban One. About 8 in 10 visitors are expected to come from the Richmond metro area.
A casino supporter waves a sign urging voters to approve the Richmond Grand Resort and Casino at block party organized by the developers in Richmond, Va., Sept. 30, 2023. Developers are ready to spend $8.1 million on the referendum campaign. Photo by Jimmy Cloutier/VCIJ
Virginia’s wager on casinos comes as the gambling industry is experiencing significant changes. Casinos now face stiff competition not only from nearby gambling establishments but also alternative gaming options, such as slot-machine-like "skills games" commonly found at convenience stores and online sports betting, which has exploded in popularity since 2018.
The two casinos under development in Hampton Roads stand to lose about $42 million in gaming revenue if the one in Richmond is approved, according to a 2022 Joint Legislative Audit and Review Commission study. Those in Bristol and Danville, located to attract out-of-state visitors, could face competition from alternative venues in North Carolina if lawmakers there decide to expand casino gambling outside of Native American tribal land.
Scavette said that casinos are less likely to spur economic growth as competition increases, making it unlikely that cities opening new gambling venues will experience the success of early adopters like Atlantic City, New Jersey.
If approved, the Richmond casino will be built between Walmsley Boulevard and Trenton Avenue on industrial land currently owned by the tobacco giant Altria and neighboring Amazon warehouses and a DuPont manufacturing plant. Developers chose the site for its proximity to I-95 and away from existing residential neighborhoods.
The proposed project, which could take 30 months to complete, includes a Las Vegas-style casino with slot machines and table games, 250-room hotel, 3,000-seat concert venue, restaurants, a 55-acre outdoor park and a sound stage for media production.
A 2021 economic impact assessment commissioned by the city estimates that a casino in Richmond will generate $30 million in local tax revenue, including $19 million from gaming. The assessment projects that the casino itself will earn more than $300 million in gaming revenue.
On Sept. 25, The Richmond City Council unanimously approved a non-binding resolution promising to allocate local gaming tax revenue to child care services for low-income families. In addition, developers have agreed to pay $26.5 million upfront if voters approve the casino. The resolution sets that money aside to develop parks and recreation centers, build two childcare centers in South Richmond and establish a Child Care and Education Trust Fund.
City officials have emphasized that the development will be fully financed by private investors, meaning the casino will not receive tax subsidies or public funding. Urban One and Churchill Downs, which would own equal shares of the casino, plan to offer local partners an opportunity to invest.
Developers have promised millions of dollars in additional benefits, including 3% of gross receipts, $50 million in local media production and $16 million in charitable giving over the next 10 years. To sweeten the pot for the second referendum, developers now have sworn to embrace union jobs and build multiple pickle ball courts.
City Council President Michael Jones presides over a council meeting, Richmond, Va., Sept. 25, 2023. The council approved a non-binding resolution promising to allocate local gaming revenue to child care services for low-income families. Photo by Jimmy Cloutier/VCIJ
PHOTO: CITY COUNCIL OFFICIAL
Organized labor has thrown its weight behind the project. The Richmond Building and Construction Trades Council earlier this year reached a project labor agreement with Hourigan, the general contractor slated to build the casino. Council president Charles Skelly said that construction could create 2,000 jobs, with first-year apprentices starting at $18.43 an hour.
Unite Here, a labor organization which represents leisure and hospitality workers across the country, also struck a deal with developers that lays out a process for unionization. Sam Epps, a spokesperson for the organization, told the Virginia Center for Investigative Journalism at WHRO that Unite Here's current members earn considerably more than non-union workers.
Nationally, leisure and hospitality workers earned on average $21 per hour last year, according to the U.S. Bureau of Labor Statistics. Union workers made on average $100 more per week than their non-union counterparts.
The union represents 8,000 workers in Virginia.
In September, Unite Here, launched its own referendum campaign backed by developer and union funds. Unite Here received $800,000 in September from a committee funded by Urban One and Churchill Downs, and an additional $375,000 from various trade unions, as of Oct. 11, according to campaign finance reports.
Paid canvassers and union members plan to knock on 105,000 doors by Election Day.
Sasha Williams, 35, joined Unite Here after food service workers at Virginia Commonwealth University voted to unionize in 2021. A paid canvasser for the campaign, her pitch is simple: the city is desperate for good-paying jobs, especially in South Richmond where she lives.
“It’s the pay that really matters, that decides whether you can live sustainably,” Williams said. “We don't have a lot of jobs that pay the necessary wages that we need to survive with everything skyrocketing.”
Developers say the proposed casino would create 1,300 full- and part-time jobs. Most would be open to workers without technical training or college degrees.
The 2021 referendum failed by fewer than 1,500 votes — or two percentage points. Organizers aim to increase voter turnout, especially in precincts that previously supported the casino across South Richmond.
Paul Goldman, a political strategist and former chairman of the Virginia Democratic Party who opposed the casino in 2021, has launched another campaign to block development. He argues that the casino will need to siphon millions of dollars from already disadvantaged communities in Richmond in order for developers to meet their promises to voters and city officials.
"A casino is bad for the poor," Goldman told VCIJ at WHRO. "It's bad for the addicted. It's bad for the community. It saps money out of the community."
The Virginia Council on Problem Gambling received 860 calls from people seeking help with a gambling addiction in 2022, an increase of 157% since 2020, when the General Assembly legalized sports betting and opened the door to commercial casinos. The council’s most recent annual report said that slot machines were driving most calls.
Under state law, a portion of tax revenue from gaming is required to fund problem gambling services, and developers have promised an additional $200,000 each year in support of mental health assistance.
Casino supporters, meanwhile, argue that gamblers will gamble, whether or not Richmond expands gaming options.
“Gaming is already here,” City Council President Michael Jones said at a recent city district meeting. Jones, a candidate for the House of Delegates, noted how many so-called games of skill are found in local shops. “Go to any convenience store, it's there. But we’re not getting the money.”