Virginia Casino Approval Bill

Governor Northam Presses Pause On Virginia Casino Approval Bill

Friday, 17th April 2020

In March, Virginia’s General Assembly took a step forward on the Virginia casino approval bill. The Virginia governor stepped in, causing confusion and delay.

State Senate Bill 36 gave five cities the opportunity to hold a public referendum this November. The referendum would let their citizens decide if a casino should operate nearby. The cities include Bristol, Danville, Norfolk, Portsmouth, and Richmond.

Is The Referendum On Track?

The first step in the Virginia casino approval process is a referendum on the issue. Residents supported the idea of a referendum and local governments endorsed the concept. It seemed like it was the rare proposal to get votes from all political parties on the state level. When it passed both the Virginia House and Senate, officials in the affected cities started preparing for a referendum, assuming the bill would be signed into law. Then, Governor Ralph Northam stepped in.

Governor Northam sent the bill back to the Virginia General Assembly with a few proposed amendments.

Increased Tax Revenue

The governor focused his concern on tax revenue. Any new casinos would mean increased tax revenue for the state. In the original bill, two-thirds of the tax revenue would go into the general fund.

“….remaining revenues in the Fund shall be appropriated annually as general fund revenues,” the bill states on line 1740.

Northam wants this changed. In his list of recommendations, the governor wants all new tax revenue from casinos spent on very specific programs.

“[Revenue] shall remain in the Fund until appropriated by the General Assembly for programs established to address public school construction, renovations or upgrades,” Northam’s revised proposal reads.

Additional Proposed Amendments

The governor added other major amendments as well. Although local media claimed the others dealt with grammar and spelling changes, there was more to it than that.

Enforcement Provisions

For example, line 1120 of the original bill stated that “accredited federal, state and local law-enforcement agencies” will make sure the laws are enforced at all new casinos. Instead, Northam wanted it to simply say “an accredited law enforcement agency.”

The difference is a subtle one, but it would open the door to private companies and accredited security firms handling the work. In fact, as long as a group is accredited in Virginia, they would be allowed to apply. The proposed amendment would make the guidelines a lot broader.

Employee Background Checks

Then there’s line 1216, which in the original document requires fingerprints and background checks for casino owners. It also requires fingerprints and background checks for their personnel and “any other individual determined by the Department to be an active participant in the casino gaming activities of any licensee or permit holder or applicant for a license or permit.”

Now that makes sense. If someone is applying to run or work at a casino, you need to know their background. You need to understand if they have a criminal record and if they might pose a danger, legal or otherwise, to the other staff. It’s a standard practice most corporations follow. But in this case, the governor wanted part of the requirement removed.

He requested that the line “any other individual determined by the Department to be an active participant in the gaming activities of any licensee or permit holder or applicant for a license or permit” be removed. That means any “active participants” not on the listed staff of a casino wouldn’t be subject to fingerprint checks or background searches. This could include lobbyists as well as any potential partners in the company.

Real Money At Stake

Governor Northam’s refusal to sign the original bill caused surprise on both sides of the aisle. They were also concerned because any hold-up in getting a bill passed could postpone the vote for another year. And there’s a lot of money at stake here.

In 2019, Virginia’s Joint Legislative Audit and Review Commission issued a report predicting the anticipated revenue from Virginia casino approval. The Commission estimated that combined, the five proposed casinos would generate more than $900 million within five years.

Specifically, the report states that collectively, the five casinos would make $970 million in that period, with $114 million going to the state and $65 million divided between the five cities.

On its own, the proposed casino in Bristol would pull in $15 million for the state. But if the Assembly approves Northam’s amendment, that $114 million would be allocated for school construction, not general fund projects.

Virginia Casino Approval Process – Next Steps

Currently, Virginia’s Senate and House of Delegates’ schedule sends lawmakers back to work on April 22. There are a few options for what could happen next.

First, both groups sign off on the Northam amendments, in which case the governor signs off and it becomes law. If that happens, the referendums will happen as planned on November 3. This is the best-case scenario.

There could also be a procedural roadblock. Under Virginia law, the General Assembly isn’t allowed to change the governor’s amended proposal. They can only give it a yes or no vote. It’s possible that lawmakers could reject the proposed changes. This would send the bill back to Northam. He will likely veto the bill. Then, it’s back to the drawing board for both casino owners and elected officials in the five affected cities.