Bad Ideas Have Bad Consequences
“I think we had some buyer's remorse by some of the people because of how much gaming was actually done so quickly.”
That’s what Secretary of Finance, Aubrey Layne, was quoted saying in an NPR article last week about the overall impact that historical horse racing (HHR) machines and “games of skill” are having in Virginia, in particular on the Lottery.
HHR machines (i.e. slot machines by another name) were approved by the General Assembly in 2018, and went online this year at the Rosie’s Gaming Emporium at Colonial Downs and in the Richmond area. There are also thousands of unregulated “games of skill” machines popping up in convenience stores and bars all across Virginia.
The Secretary of Finance and the Lottery director, as well as some lawmakers, are now stunned at how Rosie’s and “games of skill” are cutting into Lottery revenues.
Apparently, the state was caught off-guard by a dip in Virginia Lottery revenues this year. According to Lottery director Kevin Hall, the Lottery has experienced a 15% drop in profits in the current fiscal year, which includes a 36% drop in profits in October when compared to 2018. Hall explained that “[s]ales of scratch tickets -- which represent over half of total Lottery sales -- continue to be affected by the expansion of the unregulated ‘games of skill’.”
In Virginia a portion of Lottery profits are supposed to go towards helping fund Virginia’s K-12 public schools. During fiscal year 2018, it contributed over $600 million to the Department of Education. Of course it’s become widely known that the majority of those funds never actually make it to the local school divisions.
Secretary Layne also mentioned that the state was not prepared for the social impact at places like Rosie’s Emporium, most likely referring to the fact that in the first three months of its opening police were contacted 50 times about criminal and deviant behavior at New Kent location. And after opening on July 1, the Richmond Police were called to Rosie’s Gaming Emporium on Midlothian Turnpike 12 times in the first ten days.
But he also could’ve been referring to a recent report of a deceased body found in the woods outside of the Rosie’s Emporium located on Midlothian Turnpike back in September, which only shows that these gaming centers are not always located in the safest areas.
Let’s be clear, what some policymakers are having is not buyer’s remorse. When you regret purchasing a vehicle because it spends more time in the repair shop than it does on the road, that’s buyer’s remorse. This goes much deeper.
What they're experiencing right now is purely conviction because they now realize that all of the warnings about HHR machines and so-called “games of skill” redirecting revenues away from the Lottery and the increased criminal activity at these gaming sites are coming true.
It’s no surprise that the Northam administration may pursue a more “cautious approach” to expanding casino gaming or sports betting during the upcoming 2020 General Assembly Session. It also shows that Delegate Charniele L. Herring (D - Alexandria) was right to inquire during last month's Joint Legislative Audit & Review Commission (JLARC) meeting whether Virginia should consider gambling expansion now when the General Assembly just approved HHR machines less than two years ago.
While this report alone won't convince enough legislators to at least put a pause on the expansion of gambling in Virginia, it's yet further confirmation of our persistent warnings the past two years about the financial and social costs associated with casinos. However, the more reports like these that reveal the true culture of casinos and the devastation they have on families and communities, the harder it will be to convince people that Virginia is ready for more gaming.
