The Virginia Racing Commission is considering allowing up to 3,000 historical horse race gambling machines at Colonial Downs and off-track betting parlors throughout the state, according to recently published draft regulations.
Earlier this year, Gov. Ralph Northam signed a bill to legalize the slots-like machines as a way to revitalize the state’s struggling horse racing industry, despite opposition from critics who called it a major expansion of gambling.
To ease those concerns, the governor instructed the racing commission to come up with “reasonable limitations” on the machines, which let players gamble faster by placing bets on horse races that have already been run, without knowing the names of the horses or the details of the race.
The racing commission’s preliminary rules would allow up to 700 machines at the main track in New Kent County and create a path for similarly sized betting parlors in large cities and counties that have authorized off-track betting.
The proposed regulations allow up to 700 machines in localities with populations of 120,000 or higher, which could potentially lead to significantly larger off-track betting facilities in Richmond, Chesapeake, Hampton and Henrico County.
However, local governing boards would have to sign off on any large-scale betting facilities. Without local approval, the number of machines allowed at off-track betting facilities in large localities would be capped at 245, or 35 percent of the maximum limit.
The regulations call for lower caps in smaller jurisdictions. The machine cap for localities with populations between 60,0000 and 120,000 would be set at 300, while localities with fewer than 60,000 people would have a 150-machine cap. Off-track betting sites in smaller localities would also require local government approval before hitting the maximum number of machines.
The regulations tie the number of historical horse racing terminals to the number of live racing days at Colonial Downs, which would require the track owners to hold more live races in order to add machines. Operating 3,000 machines would require 30 days of live racing. The regulations require a minimum of 14 live racing days, with at least six races per day.
“We are reviewing the proposed regulations and assessing our next steps,” said Mark Hubbard, a McGuireWoods communications consultant representing Colonial Downs. “We appreciate the expeditious work of the administration and look forward to working with the Virginia Racing Commission as the rule making process continues.”
The racing commission’s next meeting is scheduled for July 31, but it’s not clear when the regulations could come up for a final vote.
“I’m sure there’s going to be some input and some questions,” said racing commission Chairman D.G. Van Clief Jr., who said the draft regulations were crafted with input from the Northam administration.
The new owners of Colonial Downs, bought in April by Chicago-based Revolutionary Racing, are planning to operate 10 off-track betting facilities. The state currently has four off-track betting sites: two in the Richmond area, one in Chesapeake and one in Henry County outside Martinsville.
Several other localities — the city of Hampton, Scott and Brunswick counties, and the town of Vinton in Roanoke County — have approved off-track betting but do not have any active betting parlors.
The machines are expected to be a major revenue stream for Colonial Downs, Virginia horse groups, and state and local governments.
Kentucky, one of a handful of other states that allow historical horse race machines, had 1,755 machines in May. For that month, those machines drew in $98.9 million in total bets, paying out $90.8 million to players, a $6.2 million commission for the machine operators and almost $1.5 million in tax revenue.
Virginia racing officials said they looked to Kentucky’s historical horse race regulations as a model when drafting their regulations.
An economic study commissioned by Revolutionary Racing said that when the reopened Colonial Downs facility reaches “full capacity” in 2022, it could produce 1,400 jobs and an annual economic impact of almost $350 million and generate $41.6 million per year in state and local tax revenue.
Most of that money would come from historical horse racing machines, which were key to the sale and planned 2019 reopening of Colonial Downs.
The terminals look and feel like slot machines, a likeness that has led to legal challenges and court scrutiny in other states. But because the payouts are generated from pools of player money, the machines fall under pari-mutuel wagering laws that apply to live horse racing.
Some historical racing machines replay a video of the race finish, but the racing commission’s draft regulations say the machines can also display the results through “digital, animated or graphical” depictions.
In Kentucky, similar machines featured cartoon horses galloping across the screen instead of real ones, drawing a lawsuit from a family values group whose attorney said the machines could feature “cartoon frogs or wiener dog races.”
The regulations also state that Colonial Downs, which has not yet received a new license from the racing commission, must file an annual report detailing its efforts to identify compulsive gamblers and direct them to resources to prevent gambling addiction.