Planned Henrico gaming facility could be prohibited from operating without voter approval

Language included as part of the Virginia Senate’s proposed budget for the coming fiscal year would prohibit a planned gaming facility with 175 historical horse racing machines from operating in Henrico County unless it earns public approval through a referendum.

The budget amendment would update Section 59.1-391 of the Code of Virginia to forbid the Virginia Racing Commission from granting an initial license to any proposed racetrack or satellite facility “until a referendum approving the question is held” in the locality in which such facility is planned.

Churchill Downs, Inc. is planning to open a historical horse racing facility known as Roseshire in the Staples Mill shopping center sometime this year. Work at the site has been ongoing for months.

The language of the amendment effectively strengthens the text of a bill proposed by Henrico Senator Schuyler VanValkenburg (D-16th District), which would have required approval through a referendum for such a facility or permitted it to operate without that approval if it ceded more than half of the revenue it otherwise would have been permitted to earn. The Senate budget amendment simply eliminates the latter option.

The amendment (see attachment below) would forbid the Virginia Racing Commission from granting a license to any racetrack or satellite facility proposed in a locality that had not passed a referendum authorizing pari-mutuel wagering after July 1, 2018 and in which no such wagering at satellite facilities on historical horse racing had been authorized on or before Jan. 1 this year. Neither has occurred in Henrico, meaning Roseshire would be ineligible for a license without a public referendum.

But a referendum only would be held if at least 5% of the registered voters in the county – or about 12,500 people – signed a petition requesting it, according to the amendment.

VanValkenburg’s original bill, SB1223, passed the Senate General Laws and Technology committee 13-1 Jan. 22 but was not heard by the Senate Finance and Appropriations committee.

The amendment was approved as part of the Senate’s overall budget bill by a 38-2 vote Feb. 6. Next, it will be considered by the House of Delegates’ Appropriations Committee and ultimately the entire House. If approved by the House and included in the final compromise budget plan agreed upon by a conference committee of lawmakers from both chambers, the amendment would take effect July 1 with a signature from Youngkin.

On Thursday, VanValkenburg told the Citizen that he’s “cautiously optimistic” that the amendment will be included in the General Assembly’s final budget proposal to the governor.

But if the language restricting the Roseshire facility is included in the final version of the budget presented to Youngkin, the governor still could remove it with a line-item veto. That would kill it, unless a two-thirds “supermajority” in each chamber rejected his veto.

Proposal angered county officials, state representatives

Colonial Downs’s decision to file plans for the Roseshire facility last year – just five days before a Henrico Board of Supervisors vote that would have required the facility to seek approval through a public process – angered county officials and all eight members of the General Assembly who represent the county.

They argued that although the company had the legal right to file its plans when it did – effectively grandfathering itself under existing county code, which permitted as many as 175 HHR machines on any B-2 (Business District) property in the county by right – it acted unethically in doing so because it knew the county was planning to update its code.

In a July 16, 2024 letter to Churchill Downs CEO William Carstanjen, VanValkenburg and the other seven members of Henrico’s General Assembly delegation urged the company to withdraw its plans, which they said had “the potential to bring about undesirable changes to our community. . . Allowing this project to proceed without proper scrutiny and public input would be a disservice to the people we represent.”

That letter went unanswered, according to VanValkenburg, as did other attempts by the delegation and county officials to communicate with the company.

Many residents of the region also have expressed anger about the plans, although some support the concept. A community meeting held by VanValkenburg and Republican Brookland District Supervisor Dan Schmitt in December attracted a crowd of several hundred people, most opposed to the facility.

During a subcommittee hearing Jan. 20 on VanValkenburg’s bill, Churchill Downs Government Affairs Director Aaron Palmer told senators that passage of that bill would “put us out of business” at the location. He also argued that the legislation would unfairly target and punish only Churchill Downs and would do so despite the fact that the company had not done anything that wasn’t permitted at the time.

“At every step we followed the law, their regulations,” Palmer said of the county.

Legislation adopted in 2018 by the General Assembly and regulations developed by the Virginia Racing Commission permitted New Kent racetrack Colonial Downs (which is owned by Churchill Downs) to open and operate as many as 10 off-track gambling facilities statewide offering historical horse racing machines, as a way to help fund live racing purses at the track (which is Virginia’s only horse racing rack).

HHR machines look like slot machines but allow people to wager on previously run horse races by selecting a horse (by number) after viewing its past race performances. Horses and their jockeys are not identified by name. The machines show only the last 10 seconds or so of a given race, and thousands of races are included in the system’s database.

The eight HHR facilities that Churchill Downs operates in Virginia were on pace to have generated more than $5 billion in wagers during 2024 – including nearly $347 million in revenue to the company – according to reports reflecting the first 11 months of the year that were published on the VRC’s website.

If the HHR machines at Roseshire generate the same average amount of daily revenue that three of the HHR facilities nearest to that site generated last year, Roseshire would produce $337.72 million in total revenue during a full year. At that level, Churchill Downs would receive an annual payout of between $24.6 million and $26.6 million under current law.