Recent discussions in North Carolina have largely centered on online sports betting, yet a new draft casino bill is gaining traction among lawmakers. This proposed legislation could significantly impact the emerging casino industry in Virginia, particularly affecting Caesars Virginia in Danville, while also placing financial pressure on tribal casinos in the western part of the state, where gaming revenues are estimated to approach $1 billion.
The proposed bill lays out plans for four Class III casinos, designating one for the Lumbee Tribe in the eastern part of the state. The remaining three casinos would be established by a single entity selected through a bidding process. Notably, the bill restricts the locations of these three commercial casinos to Rockingham, Anson, and Nash counties.
To qualify, a site must meet several criteria, including being in a development tier one area, within 60 miles of an international airport, outside regions served by Interstate 77, and not containing Indian lands with gaming as of July 1, 2023. Additionally, the counties must have populations below 100,000, and not be listed in specific exclusions.
Part of the casino development plan includes the formation of entertainment districts in each of these locations, aimed at enhancing tourism and stimulating rural economic development. The vision is for a blend of retail, hotels, entertainment, and residential developments to accompany the casinos. Bidders will need to invest a minimum of $1.5 billion and adhere to job creation targets in each county. This initiative is branded as a Rural Tourism Incentive Programme, emphasizing job creation and economic growth in rural areas.
A close look at the proposed sites reveals their strategic importance. The Caesars Virginia casino, which opened a temporary facility on May 15, 2023, lies just across the border in Danville and has plans for a permanent venue expected to launch in 2024. This development will include a casino, a 500-room hotel, a conference center, and a 2,500-seat entertainment venue featuring 1,300 slot machines and 85 table games.
Caesars anticipates attracting many guests from the Winston-Salem, Durham, and Raleigh metropolitan areas, predicting that over half of its revenue could come from North Carolina residents. The addition of Rockingham County as a potential casino site is seen as a direct response to the Danville casino, providing a competitive alternative closer to these cities. A successful casino in Rockingham could reduce Caesars Virginia's market share by approximately 45% to 50%, raising its operating costs amid increased competition.
While Nash County is located about 40 miles east of Raleigh-Durham, it is not as strategically positioned as Rockingham but still presents a more convenient option than Danville. Anson County, situated 35-45 miles east of Charlotte, offers potential competition to the Catawba Two Kings Casino Resort, which is currently limited by regulatory issues.
The potential effects of North Carolina's casino expansion on existing properties vary. Harrah's Cherokee casinos may experience a minor impact of less than 10%, as residents from central and eastern North Carolina find new, closer alternatives. The Hard Rock Bristol property in Virginia, positioned 120 miles from the proposed North Carolina sites, is unlikely to be affected significantly.
State Senate leader Phil Berger estimates that approximately $259 million is currently leaving North Carolina for the Danville casino, prompting a search for solutions to retain revenue and employment within the state. This situation mirrors the historical back-and-forth between states, where developments in one prompt responses from others.
Following the passage of mobile sports betting in 2023, and with expectations for a market launch in 2024, this competition could influence the race for one of the 12 available sportsbook licenses. Operators engaged in both gaming avenues could see greater returns as new developments gain retail betting rights.
A considerable $25 million licensing fee will accompany the proposal, alongside a 22.5% tax on gross gaming revenue, which is considerably higher than the 6% tax paid by tribes, though it remains competitive with other states. The stipulation for a $1.5 billion investment and the establishment of entertainment districts means only well-capitalized firms with experience in such developments would be positioned to compete effectively.
The Cordish Companies, known for their Live! entertainment brand, have the expertise to take on the three proposed projects and are lobbying in support of the legislation. The unusual bundling of these projects aims to attract experienced operators capable of competing against established entities like the Eastern Band of Cherokee and Caesars.
Major gaming companies such as MGM, Penn, Wynn, and Bally’s may emerge as strong candidates. Additionally, tribes with the resources for casino development, like the Seminoles and Mohegan Gaming, could join the bidding process.
The Lumbee Tribe stands to benefit from one of the casinos, even as it seeks federal recognition, a critical factor for its potential development rights. Local leaders view this recognition as an essential issue deserving of rectification. The bill acknowledges this by permitting casino development in ten specified southeastern counties.
Should this proposal advance, it could spark significant implications for future iGaming developments. Forming alliances between land-based operators and online betting companies may intensify lobbying efforts for legalized iGaming in the future.
As of now, the bill has not moved forward, but there is notable legislative support, and operators are showing interest. This proposal could evolve over the next couple of years, but the trend of North Carolinians traveling to Virginia for gaming will likely keep the matter relevant. The economic benefits and potential tax revenues will further amplify discussions around this issue.
If the bill passes, the key winners will be residents of the host counties, the Lumbee Tribe, and North Carolina’s economy as a whole. The operator that secures the rights for the three properties could see gross revenue estimates exceeding $1.2 billion.
Conversely, Caesars and the Eastern Band of Cherokees, along with their Danville casino project, would likely face significant setbacks. The Catawba Nation and their Two Kings property would also experience diminished market opportunities.
