A Virginia Senate committee voted 10-5 Tuesday to block a gambling-related bill that could have allowed Richmond to collect several million dollars more per year from the city’s Rosie’s gambling facility.

The Senate Finance and Appropriations committee voted 10-5 Tuesday morning to reject the proposal, which would have let Richmond keep a bigger share of the tax revenue generated by the local Rosie’s instead of having to split the money evenly with New Kent County.

A rural but fast-growing county east of Richmond, New Kent is home to the Colonial Downs horse racing track affiliated with Rosie’s facilities across Virginia. 

Under current law, Richmond only keeps 50 cents of every local tax dollar generated at the Richmond Rosie’s, which primarily features slot machine lookalikes known as historical horse racing machines because they’re powered by an archive of past horse races. The other 50 cents goes to New Kent under an arrangement designed to ensure the county gets a cut of the proceeds from Rosie’s facilities all over the state.

The money New Kent gets from gambling that occurs in Richmond is meant to protect the county’s status as Virginia’s main horse racing destination, but some lawmakers feel the 50-50 split is outdated and unfair. Several critics of the current setup have raised concerns about gambling facilities in areas with substantial Black populations generating just as much money for a distant, overwhelmingly white county as they do for the communities that host them.

Sen. Lamont Bagby, a Democrat whose district includes most of Richmond, said he’s hopeful the issue can still be addressed through the state budget the General Assembly will craft in a few weeks.

“No way that practice continues,” he said. “We have the right folks paying attention.”

Bagby is not a member of the Senate committee that blocked the bill. Another Richmond representative — Sen. Ghazala Hashmi, D-Chesterfield — is on the committee and voted against the proposal. Hashmi didn’t speak during debate on the bill and didn’t immediately respond to a request for comment on why she opposed legislation that would have benefited Richmond.

The bill that failed in the Senate would have increased Richmond’s share to 75 cents of every local tax dollar from the slots-like devices, technically known as historical horse racing machines. It would’ve dropped New Kent’s allotment to 25 cents. The bill — which would have affected all localities with a Rosie’s — didn’t alter the overall tax rate on gambling at Rosie’s, meaning it didn’t impact the bottom line of Churchill Downs, the parent company of Rosie’s and Colonial Downs.

Under the current system requiring an even split, both localities got $3.7 million from the Richmond Rosie’s, according to data for the most recent budget year. If the revised ratio proposed in the bill had been in place, Richmond would have made about $5.6 million to New Kent’s $1.9 million.

The pot of local tax revenue could grow because the Richmond Rosie’s is undergoing an expansion. The facility, which opened in 2019, had been operating with around 700 gambling machines, but that number is expected to grow to 1,200 by the end of the year.

The issue could also eventually affect Henrico County due to the Rosie’s being planned for the Staples Mill Shopping Center in the western part of the county. New Kent would also get half of the local tax revenue generated from the Henrico Rosie’s, which has drawn strong opposition from county residents and leaders angry at Churchill Downs for trying to open a gambling facility in a location the county didn’t agree to.

State Sen. Schuyler VanValkenburg, D-Henrico, has filed a separate bill on the Henrico controversy. His bill, which is still pending in the Senate, would require Churchill Downs to either go through a public referendum process in Henrico or get slapped with a higher tax rate at the Henrico location. VanValkenburg has said he’s trying to create a stronger incentive for gambling companies to go through a public process before opening casino-like facilities, but Churchill Downs representatives have criticized the proposal as an attempt to punish the company for building a facility where Virginia law allowed it to build.

That 50-50 split with New Kent predates the arrival of modern Rosie’s slots parlors and began when off-track betting sites were much smaller facilities that mostly allowed bettors to gamble on real horse racing without traveling to New Kent.

The push to change the revenue split is being driven largely by lawmakers who represent Prince William County, where Churchill Downs recently opened a casino-like resort hotel called The Rose in the town of Dumfries. That facility will have the most historical horse racing machines in the state by a wide margin, and could produce tens of millions of dollars in local revenue that Prince William would have to split with New Kent.

Sen. Jeremy McPike, D-Prince William — the sponsor of the bill to end the 50-50 split with New Kent — told colleagues at an earlier hearing on the bill that it wasn't’ “against New Kent”  and was about keeping gambling revenue “at home.”

McPike’s bill easily cleared the Senate General Laws Committee, which handles gambling policy, by a vote of 14-0-1.

Before that vote, Sen. Jennifer Carroll Foy, D-Prince William, said the current arrangement feels “exploitive.”

“It feels like you’re robbing Peter, which is Dumfries, to pay Paul, which is New Kent,” she said.

When the bill got to its next stop, it drew opposition from influential lawmakers such as Senate Finance and Appropriations Committee Chair Louise Lucas, D-Portsmouth, and Senate Minority Leader Ryan McDougle, R-Hanover, whose district includes New Kent.

McDougle was the only senator on the committee who laid out a case against the bill, arguing that New Kent took a risk by agreeing to host horse racing decades ago and shouldn't be stripped of revenue now that everyone is benefitting from the growth of horse-related gambling. He also pointed to a state law that ties the number of historical horse racing machines allowed in Virginia to the number of live racing days at Colonial Downs.

“I don’t think it’s accurate to say that New Kent is getting some unjust return. They took the risk,” McDougle said. “And no other jurisdiction can benefit if racing days do not occur in New Kent.”

McPike took a different view on the connection between live racing and the gambling machines, saying the expansion of the Rosie’s brand across Virginia already helps New Kent by generating more and more money for the county and requiring Churchill Downs to increase race days at the track.

“For New Kent, the pie is going to continue to increase,” he said.

The slots-like machines that are the central focus of off-track Rosie’s locations are far more profitable than live horse racing. The provision in state law tying the number of machines to race days was designed to prevent the track owner from building a massive slots enterprise in Virginia while neglecting real-life horse racing and the boost it brings to the state’s equine industry.

In fiscal year 2024, New Kent collected $12.8 million in tax revenue from historical horse racing machines, with about 75% coming from machines outside New Kent. State data shows New Kent makes more money from Richmond’s machines than it does from the machines at the race track in its own county.

Richmond splits its Rosie’s tax money with New Kent County. Legislators want to change that.

Last year, Richmond’s Rosie’s generated $3.7 million for Richmond, and $3.7 million for New Kent.

The RichmonderGraham Moomaw

McPike said some backers of his bill had wanted New Kent to get no revenue from Rosie’s locations in other jurisdictions, and he felt his proposal was moderate compared to cutting the county off entirely. After his bill failed, he said he’ll be back with a similar proposal in the future.

“Probably with a little different percentage. Probably a lot lower,” he said.

Lobbyists representing New Kent spoke against the bill during its initial hearing. Richmond’s lobbyists did not give public testimony on the proposal.