After the failure of a standalone bill on the topic, Richmond now stands to gain millions of dollars more per year under a change in the pending state budget that tweaks the allocation of tax dollars from Rosie’s gambling facilities.

The new budget approved by the General Assembly eliminates a rule requiring Richmond to split its Rosie’s tax money with New Kent County, the rural but fast-growing county between Richmond and Williamsburg.

The change means the city — after two failed attempts to get a full-blown casino — would get to keep a larger share of the tax revenue from the hundreds of slots-like gambling machines at the Rosie’s located off the Midlothian Turnpike in South Richmond.

The current system requires a 50-50 split of every local tax dollar, meaning New Kent — because of its status as the home of the Colonial Downs horse racing track — collects just as much revenue from the Richmond Rosie’s as Richmond does. 

A failed bill introduced in the state Senate would have changed the split to 75-25 in Richmond’s favor.

The similar language in the state budget gives Richmond an even bigger bump, allowing the city to keep the entire pot of local tax revenue starting July 1, 2026.

“The revenue from Rosie’s in Richmond isn’t going to subsidize New Kent,” said Sen. Lamont Bagby, D-Richmond, who supported the change. “It’s staying right here in Richmond helping us to do good things like fund our schools.”

The exact fiscal impact of the change will depend on how much money gamblers spend at the Richmond Rosies in the future. For the most recent budget year, it would have let Richmond keep all $7.5 million in local revenue generated from the facility instead of only getting half that amount.

The Rosie’s tax change, if enacted, would apply to all seven Rosie’s locations in Virginia that aren’t in New Kent.

It would also apply to the Rosie’s being built in Henrico County. However, a second budget provision creates a complication for the planned expansion to the Richmond suburbs by blocking the project unless Henrico voters approve it in a local ballot referendum.

Colonial Downs and every Rosie’s in Virginia are owned by Kentucky-based Churchill Downs Inc. Though no actual horse racing occurs at off-track Rosie’s locations, the slots-like devices they’re filled with are technically known as historical horse racing (HHR) machines. They look and feel like traditional casino slots, but they’re powered by an archive of past horse races and generate money to support live horse racing in Virginia.

It was the connection to live horse racing in New Kent that inspired the 50-50 revenue split. But the HHR machines are now the big money makers in Virginia’s horse racing industry, and the Richmond Rosie’s has been one of the most profitable locations in the state since it opened in 2019.

The budget still needs to be approved by Gov. Glenn Youngkin, and there’s still some amount of controversy over both the revenue-sharing change and the Henrico-specific amendment.

After New Kent said it needs the Rosie’s revenue to help cover its infrastructure and personnel costs associated with hosting live horse racing, lawmakers added a provision allowing the county to get that money directly from Churchill Downs in the form of a new tax. For each race day at the Colonial Downs track, its owner would have to pay New Kent $110,000 starting in 2026. The track is set to host 44 days of live racing this year, meaning the new tax would add up to at least $4.8 million if the track hosts the same number of race days in the 2026 season.

Though Churchill Downs was adamantly opposed to the effort to force a countywide vote on its plan for Henrico, the company appeared to be neutral on the question of how much tax revenue each local government gets. But now that the tax change also affects the company’s bottom line, Churchill Downs opposes both horse racing-related items in the budget. The company has argued it shouldn’t be punished because lawmakers have come to regret some of the finer points of how Virginia’s horse racing laws were written.

“These measures send a deeply troubling message to every Virginia business that they may face arbitrary punishment even if they adhere to regulations and follow the law,” Churchill Downs said in a statement. “Virginia’s reputation as a business-friendly state is based on the belief that the Commonwealth keeps its word and governs in a thoughtful, transparent manner. These provisions seriously undermine any businesses’ ability to make long term investment and hiring decisions knowing that the rules could change on a whim.”

New Kent had opposed efforts to reduce its flow of gambling revenue, but seems supportive of the legislative compromise that replaces some of that money with more tax revenue from the track.

“The budget recognizes New Kent’s critical role in live horse racing in the Commonwealth,” Thomas Evelyn, chair of the New Kent Board of Supervisors, said in a written statement. “This change, though an adjustment, ensures that New Kent County has the necessary resources to continue supporting the success of horse racing in Virginia.” 

The Rosie’s roadblock in Henrico

When Virginia lawmakers legalized the horse racing version of slot machines in 2018, the legalization bill allowed machines in any city or county that had previously passed a referendum sanctioning off-track wagering. Henrico passed such a referendum in 1992, long before the state envisioned large-scale slots parlors as an add-on to horse racing. That decades-old referendum gives the company a legal greenlight to build in Henrico, but county officials say the company still should have worked with Henrico on a project the county and its residents could fully support.

Henrico officials are frustrated with Churchill Downs over the company’s move to nail down a location just before county officials could enact a zoning change to require a more robust public approval process for gambling facilities. 

That anger led Sen. Schuyler VanValkenburg, D-Henrico, to propose a change to state law that would block the Henrico Rosie’s from opening unless the company wins a thumbs-up from county voters in a ballot referendum.

VanValkenburg’s proposal also made it into the state budget, casting uncertainty over how the plan for the Henrico Rosie’s will proceed. Unless the governor vetoes the language or amends it, it would create a legal hurdle for the facility planned for the Staples Mill Shopping Center.

In an interview, VanValkenburg said the budget language is an extension of Virginia’s broader approach to gambling and the principle that gambling facilities should only be allowed in communities that welcome them.

“They’ve had multiple chances at this point to go through a public process,” VanValkenburg said. “And they just have refused every step of the way.”

If Henrico is going to have a Rosie’s, VanValkenburg said, it makes sense for the tax revenue to primarily benefit Henrico.

“Because we’re going to need to spend money on things like law enforcement. On things like infrastructure. On things like problem gambling,” he said.