Norfolk city leaders are exploring the possibility of partnering with a developer other than HeadWaters to bring a casino to the city as that group’s plans have stalled.
The city sent the Pamunkey Indian Tribe and its financial backers, Golden Eagle Consulting LLC, back to the drawing board in July to redesign plans for the casino. City leaders indicated they would reject the group’s first plan, a two-phase construction approach that envisioned the casino and adjoining resort built separately. Norfolk has not received any formal plans for review since then.
“We’re working with Golden Eagle and will have a casino with them, and if they don’t perform, we will have somebody take their place,” said Norfolk City Attorney Bernard Pishko.
Casino spokesperson Jay Smith previously said developers needed to begin construction this spring to meet the statutory deadline for obtaining a gaming license by November 2025. When voters approved a casino referendum in 2020, it came with a five-year deadline. If an applicant had not obtained a gaming license within that time, another referendum would be required.
Pishko said the city is worried about the lack of progress and that the city’s 2020 option agreement with HeadWaters developers would allow another group to be brought on if the applicants didn’t perform.
“While this Option Agreement is in effect, the City will neither negotiate nor enter into any contract for the sale of, or any option contract for the sale of, any portion of the Land or improvements thereon that is superior to the rights of GEC and the Tribe,” the agreement said.
“We’re starting to get ready in the event that they run out of time,” Pishko said, though he added the city has not met with any other developers about a casino.
At the same time city officials are moving forward with a contingency plan, several General Assembly legislators have said they are open to the idea of extending the looming 2025 deadline. However, Del. Barry Knight said the city is still legally required to treat the Pamunkey tribe as its preferred partner.
The casino is slated to be built along the Elizabeth River next to Harbor Park, the home of Norfolk’s Triple-A baseball team, The Tides. The tribe and Golden Eagle Consulting, owned by gaming industry billionaire John Yarborough, has proposed plans to build a 300-room resort and 65,000-square-foot casino floor.
But the city-owned land remains untouched by excavators or builders and the casino partners have yet to submit, let alone receive, the necessary approvals to begin construction.
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Stakes for the tribe
In a 2020 interview with the Richmond-Times Dispatch, Smith said Yarborough would provide funding for the project in the form of a “no-risk” loan to the Pamunkeys. The loan repayment would come from gaming revenue. He also said the loan deal was approved by the U.S. Department of the Interior to ensure the tribe was not being taken advantage of.
However, former Pamunkey Chief Kevin Brown still has concerns about the tribe’s partnership with a commercial group for a casino. Brown said he lives on the reservation, which is held in trust with the state.
He said he was opposed to Norfolk as a site for the casino because of how difficult it would be for the tribe to put the land in a federal trust. The 2020 development agreement bars the land slated for the casino from being placed into a trust.
Other tribal members are also wondering what’s going on with the casino, according to Brown.
“I’m sure the chief and the (Tribal)] Council know what’s going on, but they’re not being completely open with the rest of the tribe,” Brown said.
The casino applicants have also not provided information about the conditions of the deal between the tribe and Yarborough, or said whether tribal members would be allowed to view it or vote on it, Brown said.
City officials said they are not in the loop about the nature of the deal between the tribe and Golden Eagle.
“Golden Eagle has not been forthcoming with us about their financial agreement between the Yarborough investment group and the Pamunkeys,” Pishko said.
“You can always second guess whether you’ve done enough, but there was nothing obvious we could ask for” besides the documents, he said.
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Shifting landscape
While the future of the casino is unclear, one thing is for certain: In the time the tribe has sought to establish a casino, the landscape around gambling in Virginia, and across the United States, has significantly changed.
From charitable gaming and horse racing, to sports gambling and casinos, to the proliferation of slot machine-like skill games in bars and convenience stories, the ways to gamble in Virginia have expanded rapidly since voters gave the Norfolk casino a green light in 2020.
“Recognize that most of the legislative activity occurred in 2020 as COVID hit and as the economy and the operations of businesses and state agencies drastically changed,” said Kevin Hall, a gaming consultant who was the executive director of the Virginia Lottery from 2018-22.
In addition, the Rivers Casino opened in Portsmouth in January 2023, generating nearly $250 million in gaming revenue in its first year.
Though there is a flood of interest in ways to gamble, so far there is no indication that all the new options are stepping on each other’s toes, according to Steven Light, a professor at the University of North Dakota Institute for the Study of Tribal Gaming Law and Policy.
“We haven’t reached that tipping point in any market in the U.S.,” he said.
The amount spent on gambling in Virginia has risen drastically over the past decade as options have increased.
In 2012, Virginians wagered $2.4 billion. But between 2018 and 2022, wagering in the state tripled, from $3.4 billion a year to more than $10 billion, according to a 2022 Joint Legislative Audit and Review Commission presentation, which evaluates programs and provides oversight of state agencies on behalf of the General Assembly.
During that time, historic horse racing was allowed at facilities like Rosie’s Gaming Emporiums in 2018, the internet lottery sales started in 2019, and sports wagering in 2021. The legality of skills games has been in flux over the past few years, but could become legal again this year if Gov. Glenn Youngkin signs a bill regulating the machines.
The amount spent on gambling in Virginia could rise to $21 billion by 2025, according to the audit commission, but the data also assumes that four casinos will have been opened for one year by then. Three are currently open in the commonwealth — in Portsmouth, Danville and Bristol. Richmond voters rejected a casino, but legislators are considering another location, such as Petersburg.
The Pamunkey tribe had been seeking federal recognition for decades, even before federal tribal gaming was legalized, according to Brown. And by the time they got the recognition about 10 years ago, the tribe sought to establish a federal tribal casino, now equipped with the recognition and looking for a spot for development.
The country has gradually become more amenable to gambling, including a short-lived but lucrative online poker boom in the mid-2000s. But the promise of revenues following the Great Recession subdued much of the reservations about gambling’s proliferation, according to Light.
“The language changes around legalized gambling that to the idea that it’s a form of economic development,” he said.
This trend is reflected in Virginia, as longtime proponent Democratic Sen. Louise Lucas of Portsmouth was able to build a coalition with Southwest Virginia Republicans who wanted to fuel more economic development in the late 2010s. Lucas had long been in favor of using gambling as a revenue source to improve Portsmouth.
Another big moment was the U.S. Supreme Court decision in 2018 that struck down a federal ban on sports betting — an area of gambling that ties directly into Americans’ love of sports, according to Light.
“That opens the door to states to legalize sports wagering and things are often running at that point with a renewed almost craze among state lawmakers to be the first to legalize sports wagering,” he said.
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A new timeline
Now, several delegates have said it could be time to press pause, regroup and think about this new landscape.
Knight, along with Dels. Paul Krizek and Mark Sickles, both Fairfax County Democrats, have said they would be open to legislation to extend the timeframe needed for the casino in Norfolk.
“If it looks like both parties are moving ahead in good faith, I would support that,” Knight said. “I don’t want to hurt, first and foremost, the Pamunkey Indian Tribe. My first loyalty’s to them. My second loyalty is to the state of Virginia on the tax revenue and the oversight to help the Indians help themselves. And my third loyalty is to Norfolk, and if all three of them can win in this situation, we are all going to be happy.”
Knight was among those to help bring about the legislation allowing localities to hold referendums on allowing commercial casinos. He said it was to make sure there was state oversight if the Pamunkeys were already planning a casino.
The tribe’s current approach is like the state’s other commercial casinos, with none of the extra federal protection that comes with a tribal designation. Because the tribe declined to answer questions for this article, it was unclear whether they could or would take the extra steps to pursue becoming a federally-recognized tribal casino. Knight said when the legislation for commercial casinos was being written, the HeadWaters applicants indicated they were open to being involved in the new commercial approach.
Tribal gaming is a $44 billion industry with 244 tribes operating 519 casinos, which operate under the Indian Gaming Regulatory Act, according to Light. Tribal casinos can be indistinguishable to a commercial casino to the naked eye, he said.
“Only in recent years do you see some tribes with the willingness and the wherewithal to step totally outside of the IGRA (the Indian Gaming Regulatory Act) framework and not worry about having land in trust and not worry about the protections that come from having a tribal-state compact but instead operate like a commercial operator only under state law and paying state taxes,” Light said.
Brown said the tribe is biting off more than it can chew with jumping into such a large casino operation before solidifying its footing in the industry with smaller gambling operations.
“Under IGRA, there’s a lot of safeguards for tribes, but you jump into the commercial world, there’s no safeguards for tribes,” he said. “So that’s what I’m worried about.”
Knight said the state’s commercial oversight would also make sure the tribe is not being taken advantage of and the Norfolk casino rules have a clause that requires proceeds go to not just the state and owners but also to the other Virginia tribes.
Krizek, who chairs a subcommittee on gambling, Sickles and Knight all expressed interest in taking a look at centralizing the collection of gambling tax revenue by one state agency or group. Currently, revenue from different kinds of gambling are under the auspices of different departments and agencies.
“That’s why I’d like to see pause [in new types of gambling] going forward, especially until we have an agency that’s up and running that can be a regulator for all gambling in Virginia,” Krizek said. “And let’s all just take a deep breath and wait and see how that all plays out for the next couple years.”
Ian Munro, 757-447-4097
