in 2018, there were no Native American gaming centers on the East Coast between Foxwoods Resort & Casino in Connecticut and Cherokee Tribal Bingo in North Carolina
Source: National Indian Gaming Commission, Map of Indian Gaming Locations
Federal recognition of the Pamunkey tribe in 2015 opened the door for the tribe to offer some form of gambling on the reservation, or on lands acquired later by the Pamunkey, under the Indian Gaming Regulatory Act.
That tribe's potential is unique in Virginia. Six other Virginia tribes were Federally recognized by an act of Congress in 2018, but the Thomasina E. Jordan Indian Tribes of Virginia Federal Recognition Act of 2017 prohibited them from engaging in gaming. A section for each tribe stated:1
The Pamunkey were recognized through the administrative procedures of the Department of the Interior, not through legislative action by the US Congress. Throughout the long recognition process, the tribe always retained the option of using the authority in the Indian Gaming Regulatory Act to start Class II or Class III gaming operations. That risk was great enough for the MGM corporation, which operated the MGM National Harbor Resort and Casino in Maryland, to oppose Federal recognition of the Pamunkey.2
The US Congress passed the Indian Gaming Regulatory Act in 1988, once year after the US Supreme Court ruled in California v. Cabazon Band of Mission Indians that states could not prohibit gambling on reservations of Federally-recognized tribes unless the state prohibited all forms of gambling. States with a lottery, or which authorized bingo, had to negotiate some deal with tribes that wanted to open casino-style operations.
The law defined traditional behavior at tribal ceremonies as Class I gaming, including prizes for individuals and groups. Class II gaming included bingo and card games involving skill, such as poker. Class III gaming included slot machines and games of chance, such as craps, baccarat, abd roulette wheels.
The classes were intended to increase the leverage of tribes when negotiating with the states. If a state simply refused to bargain, tribes could sue in Federal court and the Secretary of the Interior was granted authority to write compacts for Class II gaming operations. States have no authority to regulate or block Class II operations on lands held "in trust" for the tribe by the Bureau of Indian Affairs.3
The law still required a state-tribal compact before a tribe could offer Class III games. That gave state officials the power to block tribes from offering the most-lucrative forms of gambling until tribes agreed to some sort of deal. Bargaining could include where casinos will be located, and some form of revenue sharing with the state.
Tribes lost the ability to sue sovereign states in a 1966 court decision, but technology has offered ways to blur the lines between Class II games of skill and Class III games of chance. Bingo machines can be almost indistinguishable from slot machines, and tribes willing to invest in high-tech equipment have regained some leverage in the negotiations.4
Starting in 2012, a State Senator from Portsmouth has asked the General Assembly to create a Virginia Casino Gaming Commission. Over 50% of the land in Portsmouth is tax-exempt, but the proposal for a new revenue source based on a riverboat casino has been rejected. Virginians have taken their gambling business out of state to Charles Town in West Virginia, the MGM casino at National Harbor in Maryland, or more-distant locations. West Virginia has five casinos, Maryland has six, Delaware has three, Pennsylvania has 12, not to mention Atlantic City and Las Vegas.5
Federal recognition of the Pamunkey could lead to a casino on lands owned by the Pamunkey, including property on I-64 outside the current boundaries of the reservation on Pamunkey Neck. Opening a casino would required three steps:6
The tribe does not expect customers to drive for almost an hour on narrow, two-lane roads from I-64 to the current reservation. The Pamunkey first announced that they proposed building a $700 million casino, hotel and spa elsewhere in eastern Virginia, working with private partners who would provide the needed investment capital. The Pamunkey planned to work with the Middle Peninsula Planning District Council to find a site on territory that was formerly within Tsenacomoco, and where local governments would support economic development based on gambling.
The site would be designated as "trust" land and added to the reservation, even though it would not be adjacent to the current reservation on Pamunkey Neck. Once the tribe and state signed a compact establishing ground rules for revenue distribution, then slot machines, roulette wheels, and card games such as blackjack would be regulated by the National Indian Gaming Commission. The tribe might start with Class II gaming prior to the General Assembly approving a tribal-state compact, but the intent was to match the scale of the MGM National Harbor operation with its 4,000 employees.7
The Pamunkey and a billionaire who had become wealthy by selling video games to Native American casinos, venture capitalist Jon Yarbrough, announced in 2018 that he had purchased 610 acres at an I-64 interchange east of Richmond. He paid over $3 million for land that was in New Kent County, on the north side of Exit 205 and just east of the Chickahominy River. The Pamunkey indicated they would consider locating a casino there, or at other locations.8
an Illinois-based video gaming operator purchased 600 acres along I-64 east of Richmond as a potential site for a Pamunkey-owned casino and resort
Source: Daily Press, Pamunkey Indian Tribe associates buy New Kent land for possible resort, casino site
A casino at the Exit 205 interchange would place a Pamunkey-based gambling center in direct competition with Colonial Downs, about 10 miles east on I-64 at Exit 214. Prior to the Pamunkey's announcement about their casino plans, the 2018 General Assembly had loosened restrictions on video gaming at the former racetrack.
Despite moral opposition to gambling by many voters, the General Assembly relies upon the Virginia Lottery to generate over $500 million annually. Legislators were willing to increase gambling opportunities in order to incentivize a new owner to re-open Colonial Downs. The potential new owner, Revolutionary Racing, had no association with the Pamunkey when it paid over $20 million to purchase Colonial Downs.9
The tribe did not commit to any project at the Exit 205 interchange when the land purchase was revealed. The Pamunkey bought an interest in the property at the Exit 205 interchange, but kept open the possibility that they might negotiate a deal to locate at some other site between Richmond and Hampton Roads. A partnership with the tribe might enable Revolutionary Racing to offer far more gaming choices at the Colonial Downs racetrack.10
As one commentator noted, even with expanded gambling on historical horse races, the racetrack is still far from the population center in Northern Virginia sending gamblers across state ines to harles Town and National Harbor. Colonial Downs is also far from most Virginia horse farms, which send thoroughbreds to race at Charles Town, Laurel and Pimlico.11
two gambling centers have been proposed on I-64 east of Richmond, one by the Pamunkey tribe and one at the former Colonial Downs racetrack
Source: ESRI, ArcGIS Online
Wherever the Pamunkey casino and resort might be located, the political approval process will involve Federal, state, and local officials.
New Kent County will benefit if either Colonial Downs or a Pamunkey casino/resort are developed and remain open. There could be local support for authorized gambling at both sites, but county officials could decide that only demand is limited and only one site will be economic. The county could choose to support just one facility, either re-opening Colonial Downs or building a new resort.
The preference of New Kent County officials for gambling at Colonial Downs over a casino owned by the Pamunkey Tribe was clear when the county organized a public meeting in May, 2018. Racetrack officials discussed how they would reopen in 2019, with historical horse race wagering machines. No Pamunkey were invited to present their proposal. Instead, the county hired a law firm not associated with the tribe to discuss the regulatory process through which Native American gambling could be authorized.
News reports of the meeting noted:12
Indian gaming politics are especially complicated if the site is not located within the boundaries of the reservation of a Federally-recognized tribe. In Connecticut, plans by the Mohegan and Mashantucket Pequot tribes to build an off-reservation casino were blocked by top officials in the Department of the Interior in 2017, apparently after lobbying pressure applied by competitor MGM Resorts International. The Bureau of Indian Affairs staff had endorsed the project, but final Federal approval was not granted.
MGM has a history of trying to block the Department of the Interior from granting Federal recognition to the Pamunkey prior to 2015, and MGM's casino at National Harbor might provide enough economic reason to interfere with the Pamunkey's plans.
Other competitors, potentially including Colonial Downs, might seek to block the Secretary of Interior from authorizing Class II gaming by the Pamunkey. Opponents could cite the Carcieri v. Salazar decision of the US Supreme Court. The judges determined that land acquired by a tribe which was not "under federal jurisdiction" in 1934 may not be taken into trust by the Bureau of Indian Affairs under the Indian Reorganization Act. Federal jurisdiction over the land is required before triggering the provisions of the Indian Gaming Regulatory Act and authorizing oversight by the National Indian Gaming Commission.13
Promoters of casinos highlight projections of new employment and tax revenues. A 2015 report on potential casino gambling at Hampton Roads noted that claims can be overstated, in part because expenditures at casinos by local residents will divert money that would otherwise be spent in the same geographic area for other goods and servces.
A Virginia casino would generate new revenue primarily from customers who lived outside the state and traveled to the casino. It could also capture revenue now being spent by Virgiians who travel out of state to gamble in west Virginia, Maryland, New Jersey, etc. A location in Hampton Roads could attract out-of-state customers from North Carolina, but might not attract people who live north of Richmond and drive to the MGM National Harbor casino.
Like all real estate, value is based on location, location, location:14