03/13/2018 3:10PM

Va. governor indicates support for Colonial slots


Virginia Gov. Ralph Northam has said that the state needs to be “open-minded” when considering the legalization of casino-style gambling, according to local newspapers, in his first comments related to the authorization by the legislature last month of slot machine-like devices at Colonial Downs.

According to the Richmond Times-Dispatch, Northam, a Democrat who took office earlier this year, cited competition from casinos in other states when responding to a question about whether he supports the legislation, which was passed by large majorities in both the General Assembly and Senate. Northam has until April 9 to sign the bill.

“There’s a tremendous amount of money in Virginia that’s going across state lines, whether it be in West Virginia or Maryland or Delaware,” Northam said earlier this month, according to the article posted on Monday. “And I think we’ve got to be open-minded. Certainly we don’t want to do something that’s regressive to people or is hurtful to people. But if there are individuals who want to do that and are going to other states, I think we should be open-minded in Virginia.”

Gov. Northam’s office has not responded to requests for comment from Daily Racing Form about his opinion of the legislation.

For years, Colonial Downs’s efforts to gain approval for slot machines were rebuffed by the Virginia legislature. This year, however, the legislation passed fairly easily, on a bipartisan basis, one year after former Gov. Terry McAuliffe included the possibility of authorizing casino-style gambling devices at Colonial in a proposed budget.

Colonial Downs, which is currently owned by Jacobs Entertainment, has been shut down since 2014, when Jacobs gave up the track’s racing license after failing to reach an agreement with local horsemen over racing dates. Jacobs Entertainment has an agreement to sell the track to a Chicago-based group called Revolutionary Racing, contingent on the legislation becoming law, a deal that was struck prior to the legislature beginning its general session this year.

Revolutionary Racing hired three lobbyists to work the legislature this year, according to the Times-Dispatch. The company is headed by Larry Lucas, a former gambling lobbyist who was also, briefly, the chairman of the account-wagering company Youbet.com in 2002, and Prentice Salter, a Chicago restauranteur.

In an e-mail exchange last week, Lucas said that he preferred not to comment about the legislation or Revolutionary’s plans for Colonial Downs until the legislation is signed. Jacobs Entertainment has not responded to requests for comment.

The bill would give the owner of Colonial Downs a monopoly right to operate historical horse racing machines at the track and at the 10 offtrack betting locations that are available under law to the racetrack licensee in the state (currently, only four OTB licenses have been issued). Historical horse racing machines are devices that resemble slot machines, but they use the results of previously run horse races to determine payouts to customers.

The bill does not authorize a total number of devices, leaving that up to the state racing commission, which will have 180 days to write the rules that will regulate the machines. It does set a tax rate for the machines – 1.25 percent of revenue, with 0.75 percent going to the state and 0.50 percent going to the locality where the machines are being operated.

In Kentucky, where historical horse racing machines are in operation at three tracks and are planned for two other locations, total handle on 1,724 machines in fiscal year 2017 was $920 million, according to records from the Kentucky Horse Racing Commission. Gross commissions from the machines were $71.6 million, with $5.9 million going to horsemen, $5.3 million going to the state, and $57.8 million retained by the owners of the racetracks. The horsemen’s share and the state’s share are taken from a 1.5 percent state excise tax on the total handle through the machines.

The Virginia Equine Alliance, a group of Thoroughbred interests that banded together after Colonial closed in 2014, has said that it signed a memorandum of understanding with Revolutionary Racing mandating that some of the revenue from the devices go toward purses and the operations of Colonial. But officials for the group have said recently that they would rather not discuss plans for the re-opening of the track until the legislation is signed by Northam.

Northam did seem to suggest in his comments to the Richmond Times-Dispatch that the legislation could be viewed in some quarters as legalizing casino-style gambling, and the Times-Dispatch said that Northam “may suggest changes, but he sees nothing so far that would be a deal-breaker.” Instead, Northam said in his comments that he is fully supportive of seeing racing return to the state.

“It this is an opening to more casino gambling in Virginia, that’s something we’re going to have to discuss with legislators and communities, et cetera,” Northam was quoted as saying. “But the way I see this moving forward is to reopen that track. And I think that’s a good thing for Virginia.”