VIRGINIA LOSES $1.3 BILLION DOLLARS FROM SLOT MACHINES UNDER CURRENT PROPOSED AGREEMENT

Ever since HB1609 began working it's way through the General Assembly, we've heard all kinds of predictions about how much money will be generated by the new slot machines, and provide millions of $$$ of revenue to be divided up between the horsemen, state and local taxes, and Colonial Downs. But while these figures have all been presented in general terms, no one has explained exactly how much money each group will receive. Let's take a look at that and break it down in terms we can all understand, and then you can decide for yourself whether this is a good deal for Virginia or not.
Last week the Virginia Equine Association reported an expected win per machine of $213 per day. I think this estimate is high and a more realistic estimate is $150 per day per machine. So for the sake of comparison we will do the math with both figures and figure out who gets what. Lets start with $213. $213 * 365 days per year * 3000 machines = $233 million of WINNINGS per year. Let's say $40 million goes to state and local taxes. That leaves $193 million to be divided up between the horsemen and Colonial Downs.
Now let's use the more realistic $150 estimate. $150 * 365 * 3000 = $164 million in winnings per year. $30 million to state and local taxes leaving $134 million to be divided up between CD and the horsemen.

This all sounds great. But when you take a look at the horsemen's proposed "Revenue Sharing Agreement" with Colonial (obtained through a FOIA request) and you see what a lopsided deal the horsemen are agreeing to, it makes you wonder if passing HB1609 was really such a great idea after all. Here's what I mean. Of the $193 million to be divided using the VEA's $213 per day estimate, approximately $11.5 million goes to the VEA, and $181.5 million goes to the out of state owners of Colonial Downs. If you use the more realistic estimate of $150 per day winnings, the VEA gets $8 million and the track keeps $156 million.
The horsemen have also agreed to a side deal in reference to the OTBs that is worth $2.5 million for each of the first 5 years, but even with that added it still only amounts to $14 million & $10.5 million respectively. AND THE TRACK WALKS OFF WITH AT LEAST $150 million, money that will come out of the pockets of Virginians who live near the slot parlors, most of which will be deposited into a bank in Chicago, Illinois.
And now we hear demands for more machines? I'm confused. Something about all this just doesn't make sense.

I've been a skeptic of this whole deal from the beginning. I'm one of Virginia racing's biggest fans but I'm different than most people involved in these discussions as I am not a member of any of the horsemen special interest groups. These "non-profit" horsemen groups have their own selfish agendas that influence their decision making. They consistenly do what is best for their bottom line, and not always what I feel is best for Virginia or Va. racing. And when you compare the benefits received vs. the money that is going to be leaving the state, it appears we are getting our clocks cleaned. Plus, when you take into account how this is going to affect the Va Lottery and charitable gaming in Virginia it just compounds the problem. The Va Lottery just announced record earnings this past week. All of their profits stay here in Virginia and help fund our budget for K-12 education. That's good. Charitable gaming includes bingo, pull tabs and instant bingo, and all those profits also stay in state and the funds are used to benefit volunteer fire departments, rescue squads, athletic booster clubs, bands, moose lodges and others. Point being that the profits stay here in Virginia and are used to benefit our citizens. That's good too.
So remember this. When these slots go active they will have an immediate effect on both the Va Lottery, and charitable gaming receipts. People only have so much disposable income and if they start spending their money on slots, then the amount of money people have to spend on lottery tickets and bingo will decrease, along with the amount of revenue generated, meaning less money for education and less for the local community organizations that benefit from charitable gaming. Ouch.

Additionally, these slot parlors will not be destination casinos. Most of the people that will come to play these slots will be from within an hours distance away. That means lots of locals. It even says this in the tracks own financial impact statement that the buyers of Colonial Downs presented to the general assembly back in January. So let's look at Richmond for example. Per the governor's recommendation they can have 700 machines. That will generate $54 million in winnings. That means approximately $8 million in state and local taxes. Out of that Richmond will receive in the vicinity of $1.6 million.
Does that sound like a good deal for Richmond? Lose $54 million dollars from residents in the city of Richmond and surrounding communities and get $1.6 million back in return?
Does that sound like a good deal for any community in Virginia? I don't think so.

Is this why we passed the bill to allow slots in Virginia? This is nothing more than horsey welfare for wealthy horse owners and breeders at the expense of our general citizenry. Are we really going to allow an out of state casino operator to come in and walk off with $180 million dollars a year while in return we get $35 million in taxes and our equine industry only recieves $15 million dollars? Is that what our legislators intended when they passed HB1609? I don't think so. I think they were misled.
Also, If I were a member of the VEA or the VaHBPA I think I would be asking to see a copy of that proposed revenue sharing agreement and an explanation as to why you're getting such a lousy deal.

And one last thing. This is a ten year agreement. So let's see, $180 million times ten years equal $1.8 BILLION for Colonial Downs and $500 million in revenue for Virginia. Not so bad I guess, only a net loss of $1.3 BILLION DOLLARS.

This "Proposed Revenue Sharing Agreement" needs to be renegotiated so that Virginia receives its fair share of the profits from the installation of slot machines. Otherwise we might as well not have any sort of expanded gambling at all. Not if its going to cost our fellow Virginians $1.3 BILLION DOLLARS over the next ten years.
Before this agreement becomes effective it needs to be thoroughly vetted and substantial changes need to be made to make sure Virginia gets its fair share of the profits. This is currently not a good deal for the Commonwealth. If this is the best we can do then maybe it would be better not to have slots at all.

I call on the Virginia Racing Commission to reject this agreement and demand that the VEA negotiate a better deal for the people of Virginia. If they are unwilling to do so, then maybe we should revisit this legislation during the 2019 session of the General Assembly and vote to repeal HB1609 and start over.

Talk to you later.