Cherokee angles for Virginia casino project
Casino gaming is under serious discussion in the Virginia legislature this year, and the Eastern Band of Cherokee Indians is hoping to get in on the ground floor with a recently announced proposal to build a casino near Bristol, Virginia.
On Tuesday, Jan. 7, Principal Chief Richard Sneed and Steve Johnson, developer of The Pinnacle retail complex, issued a press release announcing their plan to build a “major casino resort” on a 350-acre tract adjacent to The Pinnacle, which is located along I-81 on the Virginia-Tennessee line. In addition to gaming, the development would offer an outdoor concert venue, recreational facilities and a hotel with an indoor water park.
“It’s imperative that we try to get into the commercial market, especially in the Virginia market, because it is only about two-and-a-half hours from us, so we see it as a great opportunity,” Sneed told Tribal Council Jan. 9. “But there’s a lot of work that needs to be done.”
The tribe and Johnson have agreed to partner on a potential casino project, but the exact parameters of the relationship are yet to be determined, as is the question of whether state law will ever allow a casino to be built on the property identified.
The legal background
In 2019, the Virginia General Assembly passed a law with language allowing casino gaming in the state, but the bill was purposely ineffective as enacted. It included a clause stating that the amendments to state code contained within in it would not go into effect unless re-enacted during the 2020 session.
The real purpose of the bill, said Johnson’s attorney Greg Habeeb, was to direct the Joint Legislative Review and Audit Commission to review other states’ gaming laws and generate a report on the potential for casino gaming in Virginia.
Completed in late November 2019, the report was “generally positive toward gaming,” and it talked about the value of making gaming licenses competitive rather than awarding them on a first-come-first-served basis, said Habeeb.
The 2019 bill limited casino construction to cities meeting criteria based on unemployment, population and poverty rates, as well as percentage of real estate exempt from local taxes. Through those parameters, it aimed to restrict casino construction to struggling areas in need of an economic shot in the arm. The five cities that meet the criteria outlined are Bristol, Danville, Norfolk, Portsmouth and Richmond.
The JLARC study concluded that with an initial investment of $200-$300 million in each city and an annual gaming revenue state tax rate of 27 percent, casinos in those five locations would generate a net $970 million annually and $260 million in tax revenue, with about one-third of that revenue produced by out-of-state visitors.
“Each casino is projected to employ at least 1,000 people, which would have a more meaningful impact in Bristol and Danville because of the relatively small size of their local labor forces,” reads a summary of the report.
Obstacles to overcome
However, casino construction is far from assured. The legislature must first pass another bill, and there are conflicting visions for what its final language should look like. Multiple casino bills have been filed already, and it’s hard to know what will ultimately end up getting passed, if anything at all.
“Last year’s bill no longer exists from a legal standpoint, so the real question is what is the General Assembly going to do this year,” said Habeeb. “There will certainly be a lot of people who think what the General Assembly does this year should be exactly the same was what it did last year. A lot of those are people who don’t like competition.”
The 2019 bill outlines a process in which any qualifying city can conduct a referendum election to authorize casino gaming in its jurisdiction. Once a referendum passes, the Virginia Lottery Board can issue a single casino operator’s license in that city as long as the project involves at least $200 million in capital investment.
That process, should it stand in the 2020 session, would present two problems for the Cherokee project. First of all, Hard Rock International has already announced plans to build a casino in Bristol, and the legislation does not provide for a competitive process should multiple entities be interested in launching a project. And secondly, the 2019 legislation uses the term “cities” to refer to the places where casinos would be allowed. The proposed location for the Hard Rock International project is within Bristol city limits, but the Cherokee project is not.
Those obstacles don’t faze Habeeb.
“I think it’s a long process,” he said of the upcoming legislative session, “and I would be surprised if the final bill looks like that bill you’re looking at.”
“The EBCI is most interested in legislation that opens the door to competition,” Sneed said in an emailed statement. “The EBCI has decades of experience with gaming and have not only seen success economically but have been able to ensure the negative aspects most people associate with gaming do not affect the EBCI. The State of Virginia needs trusted partners with experience in the gaming industry, and the EBCI hopes to be one of those partners.”
Indeed, the JLARC findings include a promising nod to the state’s willingness to work with tribal nations on future casino projects.
“The General Assembly could also stipulate that special consideration be given to awarding a license to a recognized tribal nation to own or operate a casino,” the summary reads. “Specifying such preferences in an RFP would be similar to the preferences that are commonly used in the state procurement process for goods and services, such as the preference for veteran-owned businesses.”
While it’s far outside the confines of the Qualla Boundary, the proposed location in Southwestern Virginia is squarely within the boundaries of the tribe’s original territory, which included parts of modern-day Virginia, West Virginia, Kentucky, Tennessee, North Carolina, South Carolina, Alabama and Georgia, as well as a tiny piece of Mississippi.
Moving the ball forward
The EBCI does not intend to take a wait-and-see approach to the upcoming legislative session, with Tribal Council unanimously passing a resolution Jan. 9 authorizing Sneed to contract with a lobbying firm in Virginia that can “work on behalf of the EBCI to amend Virginia’s commercial gaming legislation to pursue commercial gaming opportunities for the EBCI.”
Bringing the Bristol project to fruition would help the tribe, and failing to do so would harm it, Sneed told Tribal Council, as a casino in Bristol could siphon away customers who currently drive to Cherokee.
“If we’re unable to get into that market, there is potential for a downturn in our revenue, certainly at the Cherokee resort property, so we ask Tribal Council to support this so that we can make our foray into the commercial gaming market,” he said Jan. 9.
Unlike the tribe’s existing casinos, which are regulated under the Indian Gaming Regulatory Act of 1988 and must be conducted on tribal lands held in federal trust, commercial gaming like that proposed in Virginia would move forward independent of IGRA and be subject to state oversight, not federal.
In a separate piece of legislation passed earlier the same day, Tribal Council authorized a request for proposals to complete a comprehensive strategy for the tribe’s entrance into the commercial gaming market. The resolution passed with three no votes, from Birdtown Representative Albert Rose, Big Cove Representative Richard French and Wolfetown Representative Bo Crowe.
The Virginia project isn’t the only out-of-state development endeavor on the tribe’s plate. In two separate votes last year Tribal Council approved the purchase of a total 320 acres of developable property along I-40 in Sevier County. The tribe has closed on 122 acres north of I-40 and expects to close on the 198 acres south of the highway soon.
The property is believed to be extremely valuable for whatever ends up being built there, but there is no firm plan for its future. In December Tribal Council shot down a proposal to build a story-themed resort there. The tribe has not ruled out future construction of a casino on the property, should Tennessee state laws someday change to allow one.
In an email to SMN, Sneed said he plans to engage a lobbying firm “as quickly as possible” and to “quickly move forward” with developing a comprehensive strategy. All timelines for the casino project itself will depend on what the Virginia legislature ultimately decides, he said, and while his office will coordinate the next few steps Tribal Council will have to authorize any future funding commitments.
“I can commit that the EBCI has the financial backing to move forward on this venture quickly and are poised to bring this project to fruition if the opportunity becomes available to us,” he said.