While still miles from crystallization, Virginia’s nascent casino and sports betting market took some additional shape this week with the city of Danville’s announcement that it had selected Caesars Entertainment to be its “preferred casino gaming operator.”
“We received several outstanding bids from a variety of companies competing to be Danville’s choice for a resort casino,” Danville Mayor Alonzo Jones said Monday. “The Caesars bid stood out as the best for our community.”
The city and Caesars are now negotiating particulars of the project that would bring a $400 capital investment from Caesars, a 35,000-square-foot conference center, up to 500 hotel rooms, 1,300 permanent jobs, and about 900 jobs during construction, plus multiple restaurants and bars and, of course, a sportsbook. Caesars was able to make an impression on the Danville City Council by pointing to 55 million members of its Caesars Rewards loyalty program, several million of them located in either Virginia or North Carolina, which is five miles south of Danville.
Caesars Sportsbook is currently operating online under its own brand in New Jersey and Pennsylvania. It lags far behind other players in terms of handle and revenue in those states, chief among them FanDuel Sportsbook and DraftKings Sportsbook. Caesars also went live online in Indiana this week.
Casino approvals still needed, of course
The Lottery has been tasked by the 2020 General Assembly with regulating future casinos & sports betting in Virginia.
Follow the link to learn more about the rule-making process and timelines on when these new forms of gaming will be available. 🎲🏈
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— Virginia Lottery (@VirginiaLottery) May 6, 2020
This is all tentative, of course, as the green light is contingent upon approval of Danville voters. According to the state law finalized in April (SB 384), five “economically challenged” cities — Bristol, Danville, Portsmouth, Norfolk, and Richmond — may host casino resort properties that offer both sportsbook lounges and mobile/online sportsbooks. The decision will go to the voters in a Nov. 3 ballot question requiring majority approval.
“City council has three focus areas: reduce crime, improve education, and increase economic development,” said Mayor Jones. “If approved by voters, I say it again, if approved by voters in the November election, this project is anticipated to generate $35 million in new annual revenue which will allow the city an opportunity to significantly improve each of these areas for years to come.”
Caesars itself is awaiting other approvals, as regulators in Indiana, Nevada, and New Jersey still must sign off on the $17.3 billion mega-merger between Caesars and fellow casino giant Eldorado Resorts. That deal is expected to close in late June or July.
Looking ahead
The Virginia sports betting market will, per the enabling legislation, allow a minimum of four online-only sportsbooks to gain licensure with a potential ceiling of 18. The maximum could be reached by 12 online-only operators, five that are tethered to (or associated with) the potential five brick-and-mortar casinos, and one professional sports team’s venue, should one move into the state.
Based on the mid-range tax rate (15%) on gross sports betting revenue, a licensure fee that shouldn’t touch seven figures ($50,000 fee per principal within an organization), and the population base in and around Virginia, it’s going to be an attractive market.
One of the other cities eligible to introduce casino gaming, Portsmouth, selected Chicago-based Rush Street Gaming to develop the casino and entertainment property there, should local voters approve.
“I promise you we will build something you’ll be proud of,” said Rush Street chairman and co-founder Neil Bluhm, a real estate billionaire whose firm operates casinos in Pennsylvania, Illinois, and New York, in addition to online sites in New Jersey and Colorado. “We couldn’t be more thrilled that you’ve selected us to develop a terrific entertainment district facility.”
Rush Street Gaming would bring its BetRivers brand to Virginia. The city of Bristol has aligned with Hard Rock International, which might bring a Hard Rock-branded sportsbook to the state or perhaps a Unibet Sportsbook or bet365, both of which are partners in New Jersey.
Other moving parts
In Richmond and Norfolk, the Pamunkey Native American Tribe, Virginia’s first federally recognized tribe, is a frontrunner to lead the casino projects in those two cities. It’s unclear at this time where the Pamunkey tribe might turn for a partner in sportsbook operations.
In the interest of maximizing state tax revenue, it also remains to be seen how the Virginia Lottery might manage the sports betting licensure process — whether it is inclined to permit just the minimum of four or maximum of 12 online sportsbook operators (not including those associated with the casinos). The ability to avoid a casino market access fee or shared revenue agreement would be welcomed by online operators such as FanDuel, FOX Bet, PointsBet, and others. DraftKings has an existing market access deal with Caesars across multiple states, but we do not know if it contemplates Virginia.
The casinos will take some time to build, of course, but casino-affiliated sportsbooks won’t be at a competitive disadvantage to launch, as they would be permitted to do so in advance of casino property openings. The Caesars property probably would not open until 2023.
Here are key upcoming dates, according to the new Virginia Lottery website section dedicated to sports betting:
- July 1: Legislation passed during the 2020 session becomes effective.
- July 15: Lottery Board meeting.
- Mid-July through Mid-August: Public comment period for sports betting regulations.
- Sept. 15: Deadline for the Lottery Board to promulgate regulations implementing the provisions of HB896/SB384.
- Late September: Lottery begins accepting applications for sports betting permits. The Lottery shall make a determination regarding whether to issue the sports betting permit within 90 days of receipt of a completed application.
