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 led to the 2019 General Assembly ordering a study of casino gambling in Virginia, a precursor to anticipated approval in 2020.
The potential of the Pamunkey to open a casino was 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 pure chance, such as craps, baccarat, and roulette wheels.
By creating three classes of gambling, Congress increased the leverage of both tribes and states.
If a state simply refused to bargain, the Secretary of the Interior was granted authority to approve Class II gaming operations. Under the Indian Gaming Regulatory Act, 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
Class II operations requiring some level of skill by the gambler, including bingo and poker, can generate substantial revenue. However, the Indian Gaming Regulatory Act required tribes to get a Class III license before offering games involving pure chance without any level of skill, such as the pull-the-handle-and-see-if-you-won slot machines so common in Las Vegas. Class III gambling offered the potental for higher profits.
The Federal law required a state and tribe to negotiate a joint "compact" before a tribe could offer Class III games. State officials were given the power to block tribes from offering the more-lucrative Class III gambling opportunities until tribes agreed to some sort of deal. In exchange for state approval and the opportunity to provide a full gambling experience, tribes might bargain over where casinos will be located, and agree to share gamblig profits with the state.
The law was also designed to allow tribes to sue states and force them to negotiate and ultimately agree to a compact authorizing a Class III license. The ability to force action by a sovereign state was blocked by a Supreme Court decision in 1966, but technology has offered ways to blur the lines between Class II games of skill and Class III games of chance.
Modern bingo machines can be almost indistinguishable from slot machines. Castle Hill Studios in Charlottesville, now Castle Hill Gaming, developed video bingo machines that technically required some form of skill on the part of the gambler while offering the equivalent experience of pulling the handle of a Las Vegas slot machine. Tribes willing to invest in high-tech equipment have regained some leverage in the negotiations.4
Castle Hill Gaming, based in Charlottesville, has created a wide range of Class II video bingo games
Source: Castle Him Gaming, The Best Games in Class II
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.
Starting in the 1990's, legislators from Norfolk and Portsmouth asked the General Assembly to authorize a riverboat casino. Over 50% of the land in Portsmouth is tax-exempt, and revenue from gaming could help fund city services. the General Assembly has consistently rejected proposals to allow gambling in Hampton Roads or create a Virginia Casino Gaming Commission.5
Federal recognition of the Pamunkey authorized 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 required three steps:6
The tribe did 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, though there were still other locations being considered. Chief Robert Gray commented on the New Kent Couny land purchase: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 would benefit from a casino at either Colonial Downs or on the Pamunkey's nearby land. 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
The tribe responded that it would consider other locations. Chief Robert Gray said the tribe would sign a revenue-sharing agreement with the state and whatever local jurisdiction in which it located, in order to mitigate the extra costs associated with the facility. He also noted:13
The preferred location was revealed in late 2018 to be a site in Norfolk, next to Harbor Park and the Amtrak station.
parking lots surrounding the Harbor Park baseball stadium would be replaced by the casino/hotel complex
Source: ESRI, ArcGIS Online and Norfolk City Council, Hotel & Resort Casino Update (September 10, 2019)
The tribe's financial backer, real estate developer Jon Yarbrough, proposed to purchase 13 acres between the baseball park and the Amtrak Station for $10 million. He would build a $700 million facility with up to 4,500 slot machines and 225 gaming tables, a 500-room resort hotel, up to five on-site restaurants, and a 750-seat entertainment facility. The city expected to receive a minimum of $3 million in revenue annually, and up to $33 million. The proposal included no city incentives, and local officials viewed the project as "transformational" for the city.
Norfolk officials viewed the proposed casino as a transformational economic development and revenue-generating project
Source: Norfolk City Council, Hotel & Resort Casino Update (September 10, 2019)
If the Virginia General Assembly authorized a commercial casino, then the tribe would build one according to state law and pay standard taxes for food, hotel rooms, etc.14
the Pamunkey proposed building a high-rise resort hotel, as part of the casino package next to Harbor Park
Source: Norfolk City Council, Hotel & Resort Casino Update (September 10, 2019)
If Virginia did not authorize a commercial casino, then the Pamunkey could rely upon the Indian Gaming Regulatory Act and build a casino according to Federal law. The tribe could offer slot machines and some other Class 2 gambling opportunities under Federal law. Class 3 gambling, with all types of slot machines and table games, would require a compact between the tribe and the state.
The authority of the Pamunkey to build a casino there required convincing the Department of the Interior to take that land into trust for the tribe. To get the Federal agency to take that action, the Pamunkey needed to prove that the Norfolk area was part of its ancestral lands.
When the English colonists arrived in 1607, the area on the Elizabeth River was control of the Chesapeake tribe. The paramount chief, Powhatan, seized their territory around that time Jamestown was founded and added it to Tsenacommacah. Powhatan was born into the Pamunkey tribe, so their claim to the Norfolk area was based on conquest. The Pamunkey had traditionally lived north of the Pamunkey River, so the casino was not near an ancestral town.
The current Pamunkey chief supported the plan, saying "We don't say this is ours and no one else's." The previous Pamunkey chief was more skeptical. The Virginian-Pilot reported:15
in 1607, the Pamunkey town of Powhatan was far from the proposed location of the tribe's casino (red X) in 2018
Source: Library of Congress, Virginia (John Smith, 1624)
The Nansemond tribe is the state-recognized Native American group living closest to the Elizabeth River. When Virginia returned the bones of the Chesapeake bodies which had been excavated at Great Neck in Virginia Beach, the remains were given to the Nansemond.
As soon as the Pamunkey proposed placing a casino in Norfolk, the Nansemond tribe objected. Their process for Federal recognition was different than the administrative route used by the Pamunkey. The Thomasina E. Jordan Indian Tribes of Virginia Federal Recognition Act of 2017 blocked the Nansemond from engaging in gambling, but the tribe still considered Norfolk to be within their historic territory.
There was the potential for the Nansemond to acquire land in Norfolk and have the Federal government take that property into "trust" for the tribe, with a variety of uses other than gambling there. Only one tribe would be able to go through that process in Norfolk, however. When the Pamunkey plans for a casino at Harbor Park became public, the Nansemond chief sent a letter to the Norfolk mayor saying:16
the Nansemond objected to the Pamunkey claim in 2018 that Norfolk was part of their ancestral lands
Source: Facebook, Nansemond Indian Nation (December 19, 2018)
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 had 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 provided enough economic incentive 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.17
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 Virginians 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. If a casino can attract customers who do not already live in Hampton Roads, then the local economy will grow.
The Pamunkey projected that there would be 6.7 million visits annually to their resort in Norfolk. Of that total, roughly 60% would come from parts of Virginia other than Norfolk itself. Visitors from Virginia Beach might simply shift spending to the casino from other places in Norfolk, but visitors from outside of Virginia and from more-distant places in Virginia (Richmond, Northern Virginia, Roanoke, etc.) would increase economic activity within the city.
Economists hired by the tribe claimed there would be:
- 1.4 million visitors from Norfolk
- 4.3 million from the rest of Virginia
- 1 million visitors from out of state
However, a casino could end up redistributing dollars already being spent in Hampton Roads by local residents, such as reducing movie ticket sales in exchange for betting at the Pamunkey tables. If other local businesses shrink as the casino grows, there the claims of economic benefits for a casino will not offset economic losses. The net economic impact may be close to zero.
The 2015 State of the Region Report noted:18
A group in Bristol had the same idea as the Pamunkey in 2018, and proposed a casino in a shuttered shopping mall near the Tennessee border. Key conservative Republicans who represented the area in the General Assembly endorsed the proposal. Though religious leaders in the area complained, the legisltors saw a casino as a rare opportunity to create tourism-based jobs and increase tax revenue from visitors.
Their arguments matched those of the liberal Democratic state senator from Portsmouth, Louise Lucas. Starting in 2013, she had introduced legislation in every General Assembly to authorize casino gambling in the Elizabeth River city. Other legislators from the area had done the same in previous General Assembly sessions.19
After Bristol revealed its plans, Danville business leaders then proposed a casino in their area. That city hoped to draw customers from across the border in North Carolina, and to re-start a local economy that had been heavily damaged by the decline in manufacturing jobs since the 1980's.
In advance of the 2019 General Assembly, the city councils in Portsmouth, Bristol, and Danville voted to support casino gambling, despite opposition from some residents on moral grounds. One member of the Danville City Council compared the potential economic stimulus to the recruitment of Amazon, which in 2018 chose to locate a portion of its second headquarters ("HQ2") in Arlington County:20
Bristol was a conservative area, politically and culturally. One of the casino opponents was a evangelical Baptist minister who commented:21
The momentum from the Pamunkey proposal clearly spread, with legislators recognizing that their areas could benefit if gambling restrictions were altered. No Native American tribe was associated with the Bristol, Danville, or Portsmouth proposals. The Pamunkey could lose business to competitors, or find that greater competition/advertising for casino gambling in Virginia expanded the total number of customers rather than diminished whatever gambling business they initiated.
Advocates of the Bristol casino proposal recognized that the region could support only one casino. Bristol was not Las Vegas; business at a casino in Southwestern Virginia would come predominantly from people living within a one-day drive.
The casino planners feared that a legislature in an adjacent state would authorize casino gambling before Virginia, and the first casino would also be the last casino in the area. The Eastern Band of the Cherokee opened its first casino on the Qualla Boundary in 1997. It built a second casino in Murphy, North Carolina, in 2015. That facility was desined to attract customers from Atlanta, Chattanooga and Knoxville.
The threat in 2019 came from Jenkins, Kentucky. Betting on horse races was already well-accepted in Kentucky. Bristol's leaders feared that the Virginia legislature would debate casino approval while Kentucky's legislature authorized one.
Economic change was the driver in Jenkins, as it was in Bristol. One investor in the proposed Raven Rock casino in Kentucky summarized the justification for expanded gambling:22
Jenkins was located west of Pine Mountain, a 90-minute drive from I-81. Access to the Bristol casino would be far easier for most customers. If Tennesssee authorized a casino, the competitive threat to Bristol would be much greater.
due to distance and poor roads, Jenkins might not draw gamblers off I-81 and compete with Bristol
Source: ESRI, ArcGIS Online
Building a casino further north on I-81 at Bristol was literally a gamble. The boosters pushed hard for approval by the 2019 General Assembly, fearing further competition. One stated bluntly:23
In 2019, the General Assembly approved a study of casino gambling. The anticipated 2020 bill to come from that study would authorize local referenda in Bristol, Portsmouth, Danville, Norfolk and Richmond. Voters would have to approve casino gambling, and only one casino would be allowed in each city.
The Pamunkey tribe had supported an earlier version that would have authorized casinos only in cities with at least 200,000 people. That constraint would have eliminated Portsmouth (with less than 100,000 people), blocking the possibility of a second $700 million casino, hotel and conference center in Hampton Roads that might compete with the Pamunkey's plans in Norfolk.
The committee modified the bill to specifically authorize Portsmouth, and also allowed the Pamunkey to build a casino in either Norfolk or Richmond. The state would receive 10% of the Pamunkey's revenue for authorizing Class III gaming.
State Senator Louise Lucas, a consistent advocate for authorizing a casino in her economically-stressed city of Portsmouth, exclaimed:24
Then the Senate Finance Committee applied the brakes and delayed action for a year. It required the Joint Legislative Audit and Review Commission to complete a study of the impacts of casino gambling, and no local referendum would be authorized unless the 2020 General Assembly approved. The 2019 session was a "short session" of just 47 days, and legislators were not comfortable that they understood the unintended consequences that might come with approval of casinos.
The effect of the delay was to give the Pamunkey an advantage. They could continue to prepare for a casino with Class II and potentially Class III gaming. Other investors in Portsmouth and Norfolk, as well as Danville and Bristol, lacked assurance for at least another year that their casino projects would be permitted.25
During the delay, Portsmouth re-examined its preferred location for a $700 million casino, hotel and conference center. It had originally supported a 7-acre site on the Elizabeth River waterfront where a former Holiday Inn had been torn down. City officials shifted their prority to a 50-acre parcel location closer to I-264.
The new site was closer to the interstate. It was adjacent to the Tidewater Community College campus, and had been planned for a town center called Victory Village. That project, also known as The Commons at Portsmouth, had not materialized. The 50 acres could support development of a larger entertainment district with retail shops, restaurants, and meeting space.
It was also further away from the Harbour Park location in Norfolk where the Pamunkey were considering building an equivalent casino complex. Investors doing due diligence might decide that the population in Hampton Roads was not large enough to fund two such facilities, but consultants for Portsmouth claimed that if both were built, Portsmouth would get 60% of the regional casino business. The percentages were based in part upon an assumption that Portsmouth would be authorized to have more gaming "devices" (i.e., slot machines) and tables for card games and other gambling.26
in 2019, Portsmouth officials shifted the planned casino location from the Elizabeth River to a location closer to I-264
Source: ESRI, ArcGIS Online
That delay also gave opponents more time to organize. Del. Israel O’Quinn supported legislation in the House of Delegates that would lead to a casino in Bristol, and that led a challenger to run against him in 2019 for the 5th District seat in the Republican primary.27
Advocates of a casino in Danville argued that it could generate new business activity by attracting visitors from North Carolina (Greensboro, Raleigh, Durham, Chapel Hill, Charlotte) and other sites in Virginia (Lynchburg, Roanoke, Martinsville), but a local member of the General Assembly said that the city was being "used" by those seeking a casino elsewhere.
State Senator Bill Stanley claimed Danville was included in the 2019 proposed legislation only to get the General Assembly to authorize gambling at Bristol and Portsmouth. He expressed his opposition in part by saying:28
The expectation that casino gambling would be authorized in Danville led to new interest in purchasing the White Mill building, formerly a key factory for the Dan River Inc. textile operations. The Danville Industrial Development Authority had purchased the vacant building in 2017 for $3 million, and agreed to sell it for the same price to a company that renovates historic buildings and gets them back on the tax rolls.29
Norfolk accelerted its potential for getting the state's first casino in September, 2019. It negotiated a deal with the Pamunkey to sell land next to Harbour Park for the proposed hotel, restaurants, and entertainment venue featuring either Class 2 or Class 3 gaming. Just two weeks after releasing the details for public review, the Norfolk City Council voted 7-1 to give the tribe a five-year option to buy 13 acres for $10 million.
The one "no" vote said the deal was too quick, since the state study on gambling would not be completed for another two months and Norfolk did no independent study of the claimed impacts of the casino. The tribe could build a hotel with just 150 rather than 500 rooms, install just 750 rather than 2,000 slot machines, and provide just 25 rather than 225 table games. However, the tribe's payment to the city must be at least $3 million, whatever the size of the casino complex.
Among the speakers objecting to the quick sale at the City Council meeting were representatives of the Nansemond tribe. They were unsuccessful in getting the city to examine which tribe had legitimate historical claims to the territory where the casino was proposed. That issue will have to be addressed by the US Department of the Interior when the Federal agency decides if the Harbour Park parcel can be added to the Pamunkey reservation. Incorporating the parcel within the reservation would make activities exempt from state and local taxes, except what the Pamunkey negotiate to pay in order to get a Class 3 gaming license.30
a casino in Bristol could attract customers from 150 miles away
Source: Bristol Resort and Casino, Our Location